Reference no: EM131031174

joseph is a wholesale distributor of novelty supplies. Steve operates a novelty supply store. On May 1, Joseph received a written order from Steve for 3000 miniature novelty candy bars at fifty cents each, which was the price listed in Joseph’s wholesale catalog. The order from Steve stated that the candy bars were to be chocolate and peanut butter with “Lucy for City Council” on the front to be purchased by Lucy. The order specified for delivery of half of the candy bars by September 1st and the remaining novelty candy bars by October 1st. On May 5, Joseph sent Steve a written confirmation, which acknowledged the quantity, price, delivery dates, and purpose of the purchase. Both the order and the confirmation were on forms containing a number of printed clauses. The printed clauses were substantially the same on both forms, except Joseph’s confirmation forms included additional clauses stating that all disputes about the transaction were to be resolved by arbitration, and that damages were limited to costs of shipping the items back for replacements. On June 30, Steve telephoned Joseph and told him another distributor offered him the same candy bars for only forty cents each and that Steve intended to switch his order to a new distributor unless Joseph agreed to lower his price. Rather than lose the sale with a long-term customer, Joseph stated, “For a good customer as yourself I will give you the forty cent price.” On August 30, Joseph shipped the first 1500 candy bars and, on September 2nd, Joseph accepted Steve’s payment for those novelty candy bars at forty cents each. Since 1500 right flavors of candy bars were not available, Joseph sent 500 each of white chocolate, chocolate with nuts, and chocolate with caramel. Unbeknownst to Steve, the candy bars reacted to heat and if they were not stored in temperatures less than 80 degrees, they would melt. Steve stored the candy bars in a warehouse where temperatures ranged from 99 to 100 degrees. If Steve had known, he could have stored the candy bars in proper conditions. On September 12, Steve wrote to Joseph and canceled the second half of the order because Lucy dropped out of the race. When Joseph received the letter of cancellation, Joseph had not yet ordered the second set of candy bars from the manufacturer. Joseph sued Steve for breach of contract in state court, seeking damages based on the original fifty cents price for those remaining 1500 candy bars. Joseph also sued for the additional ten cents per candy bar he is believed owed to him from the first shipment. Steve counterclaims for the ruined novelty candy bars. He also argues breach of contract because none of the candy bars confirmed to the type that he specified in his order. Joseph argues that if he is liable to Steve for anything, it is only the cost to return the candy bars because of the damage limitation clause. What arguments should each party make (Joseph and Steve) and how should the case be decided? Should this case go to arbitration? Why or why not? What about the damage limitation clause?