Reference no: EM131792875

Assignment

CASE ANALYSES

Question 1. Months ago, A and B entered into a contract whereby A agreed to purchase and B agreed to sell, 1,000 crates of Valencia oranges at a price of $100 per crate, with delivery no later than a certain date. Just prior to the last day for delivery, B calls A and informs A that B has enough Valencia oranges to make the delivery, but has decided to hold on to them. B then offers A 1,000 crates of Navel oranges in their place. A wants to know what alternatives are available.

1. Can A sue now, or must A wait for the delivery date to come and go?

2. Must A take delivery of the 1,000 crates of Navel oranges in order to mitigate the loss?

3. Can A sue for specific performance?

4. Can A rescind the contract, buy Valencia oranges in the marketplace, and sue for damages?

CASE ANALYSES

Question 2. A (buyer) entered into a contract with B (seller) to buy an aircraft for $4,000,000 on January 1, 2017 with a $400,000 deposit made on the execution of the contract. Future payments would be as follows:

$1,000,000 to be paid on March 1, 2017,
$1,000,000 to be paid on April 1, 2017,
$1,000,000 to be paid on May 1, 2017, and
the remaining balance of $600,000 to be paid on June 1, 2017.

A paid the $400,000 deposit on time but made no future payments. B informed A that the $400,000 was being retained as liquidated damages because the contract provided as follow:

"B may terminate this agreement as a result of the buyer's failure to make any future payments when due beyond the initial deposit of $400,000. If this agreement is terminated by the seller for any reason mentioned in the previous sentence, the seller shall retain all payments made by the buyer as liquidated damages and not as a penalty and the parties shall be released from all further obligations. Such damages include but are not limited to, loss of profit on this sale, direct and indirect costs incurred as a result of the failure to perform, training and selling expenses in effecting the resale of the jet."

After A breached the contract, a third party purchased the jet from B after B spent $2,000 to modify the jet. B realized a $2,000,000 profit on the sale of the jet to the third party, which was a $200,000 larger profit than B had originally budgeted for the sale to A. A has now filed suit to recover the $400,000 deposit.

1. Can A recover his $400,000 deposit?
2. Will A be able to recover the $200,000 which B realized when B resold the jet to a third party?

Text Book: ANDERSON'S BUSINESS LAW and the Legal Environment: Comprehensive Volume by TWOMEY | JENNINGS | GREENE.