1. A Saskatoon Berry Contract
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In December, 2022 a famous northern California food manufacturer and retailer, the Walnut Tree ("WT"), contracted with a Saskatchewan berry grower, the Saskatoon Berry Farm, ("SBF") for a large shipment of fresh Saskatoon berries for the next summer. They wanted them no later than July 1, 2023.
(*To our international students: they really are a type of berry found in the Prairies and are actually called "Saskatoons". I didn't make it up! They are not the same thing as raspberries or strawberries; they are small, hard, round and dark red, and are very good in pies, jams and jellies.)
The berries had to be shipped to Sacramento, California by July 1, 2023 for the peak tourist season in WT's retail and tourist facility, and the numerous farmers' markets in the area.
Both parties discussed the terms of the contract. They agreed on the quantity, price, date of the shipment and shipping costs. WT told SBF that customers praised the wonderful jams and jellies made from Saskatoon berries, which are not grown in California. The WT manager said that was why he chose SBF.
WT prepared and sent a PDF of the contract, which was entitled "Saskatoon Berries from Saskatchewan, 2022" to SBF who signed it and emailed it back. WT sent a cheque for $15,000 CDN to SBF shortly afterwards, as a deposit on the $75,000 CDN contract. This was an important sale for SBF.
WT mentioned that these jams and jellies were very profitable, and would likely net the company $150,000 USD in profit that season alone. WT would sell any unused inventory the next year, and likely even increase the retail price bv 10% per iar. They expected to sell 10.000 of the large iars of jam or jelly for $15 USD each, at $10 USD per jar profit.
There was a clause in the contract that said that if the shipment was late there would be a charge of $5,000 USD per day, representing WT's estimated lost sales per day.
Unexpectedly, there was a very severe frost in Saskatoon in June, 2023 which destroyed SBF's entire crop of Saskatoon berries. It was a financial disaster for them.
However, SBF went to the trouble and expense of arranging for a shipment of Saskatoon berries to be sent from the Beautiful Berry Farms ("BBF") in Brandon, Manitoba to WT instead. BBF has a very good reputation for producing beautiful berries. Their Saskatoon berries were slightly more expensive than SBF Saskatoon berries, and due to this year's cooler weather, they were somewhat smaller in size than usual, but BBF provided the same quantity requested by the due date.
Neither SBF nor BBF contacted Walnut Tree to tell them, assuming it would be fine as long as someone sent enough Saskatoon berries to them on time. SBF told BBF to invoice Walnut Tree directly. because SBF had no cash on hand to pay BBF (due to the severe frost damage of SBF's crop) and assured BBF that Walnut Tree urgently needed the Saskatoons in time for the summer tourist season and would be glad to get them.
The shipment arrived in Sacramento on July 1, 2023. Walnut Tree's manager went to the airport to pick up the berries. It was blistering hot (+40C) in Sacramento and the airport hangar was as hot as a furnace. The manager read the enclosed Bill of Lading and the Invoice and was surprised to read that the shipment came from Brandon, Manitoba, was somewhat more expensive ($80,000 USD), and the shipping costs were slightly higher ($1,500 USD rather than $1,000 USD initially agreed upon).
He immediately called SBF and told them that he was refusing the shipment because the berries didn't come from Saskatoon, the deal was off, no payment for the remainder of the contract was forthcoming, and demanded WT's $15,000 deposit be returned. He said he would send the Saskatoon berries back later in the week to Brandon, Manitoba and would charge SBF for the shipping. SBF was upset and said they would consult their lawyer, who specializes in contract law.
You are the lawyer for SBF. You love this client because you get wonderful fresh Saskatoon berries every summer (and you can make a fabulous Saskatoon pie!), and a gift basket of jams, jellies, and the best liqueur, made from their Saskatoons, at Christmas. You have a lot to tell SBF about this contract mess!
Important or significant terms in a contract that must be fulfilled are referred to as:
Select one:
• a. warranties
• b. mistakes
• c.preconditions
• d. conditions
• e.necessary terms 2)Brandon Berry Farms would not be a plaintiff in this case.
Select one:
• True
• False 3)Which statement is true about terms of a contract?
Select one:
a. Parties to a contract are allowed to stipulate that a particular contract term is a condition and
a a major breach of it will result in the contract being discharged.
b. Breach of a contract term considered a warranty results in the victim automatically being discharged from his or her obligations under the terms of the contract.
c. Warranties are the most fundamentally important terms in any contract.
d.
A breach of a contract term considered a condition just allows the victim to claim damages; s the victim's contract obligations will never be discharged.
e. A minor breach of a warranty has the effect of discharging a contract. 4)What are the conditions in this contract?
Select one:
a. quantity, price, date of the shipment, shipping costs, location of the berries
b. quantity, price, date of the shipment and late fees
c. quantity and price
d. location of the berries
e. quantity, price, and arrival date of the shipment 5)A novation agreement is only effective if:
Select one:
• a. The parties to the original contract, and the new party included by novation, all give their consent.
• b. All parties to the agreement have already performed their obligations under the agreement.
c. The new party introduced by novation does not intend to perform the contract.
• d. The creditor serves notice in writing on the debtor.
• e. The replacement contract contains a proper amount of consideration. 6)A willful or negligent act by a party that destroys its ability to fulfill its contractual promises amounts to a breach of contract. This was what Saskatoon Berry Farms Ltd. did in not shipping the Saskatoons to Walnut Tree.
Select one:
• True
• False. 6)Rescission has what effect on a contract?
Select one:
• a. It does not apply to contracts because it is a tort remedy.
O b. It has no effect.
• с.
It requires parties to cease and desist their performance of a contract.
• d. It returns the parties to the same position as before the contract was formed.
e.
It applies to cancelling material terms in a contract. 7)Walnut Tree, as a party to this contract, cannot choose to treat a breach of contract as discharging them from all obligations under the contract UNLESS:
P Flag question
Select one:
a. The breach was for the whole contract or an essential part of the contract, and it wasn't, since SBF and BBF sent the right quantity of Saskatoons, on time and close to the agreed price and shipping cost.
• b.
The most important condition in the contract, which was the location of the Saskatoons as having to come from Saskatoon, Saskatchewan, has been breached.
• c. BBF had breached all of the conditions of the contract, which it was evident they did.
• d. SBF, the breaching party had done everything required in the contract.
• e. WT suffers financial hardship and prefers not to fulfill the contract. 8)The Doctrine of Frustration provides that:
Marked out of 1.00
Select one:
• a. A mistake in the terms of a contract triggers this remedy.
• b.A contract will not be completed because one of the parties has been threatened by the other.
C. A contract is automatically terminated because of changing market conditions.
d. A consumer cannot be faced with standard form contracts.
• e.
An event, beyond the control of the parties, makes performance of a contract impossible. 9)a party is ready, willing and able to perform the contract, and such performance is refused or prevented by the other party, which of the following is true?
Select one:
• a. In all instances, the performing party is taken to have completed its obligations under the contract.
b. The party attempting performance must persist when performance is prevented or refused.
• с.
The party rejecting performance is entitled to do so, as a party to the contract, without consequences.
• d.
Other than where a debt is owed, the performing party is taken to have completed its obligation under the contract.
• e.
The performing party is never taken to have completed its obligations under the contract. 10)Which of these situations depicts discharge by performance of this contract?
Select one:
• a. BBF arranged to provide an alternate source of Saskatoon berries to send to WT.
b.
SBF shipped sufficient quantities of Saskatoon berries to WT.
c. WT refused to pay BBF or SBF.
• d.
SBFand BBF together provided sufficient quantities of Saskatoons to WT on time to mitigate the damages.
• e.
WT said it would return the Saskatoons to BBF. 11)Courts might grant specific performance of a contract. Would it apply in this contract?
Select one:
• a. Yes, because this is a very valuable contract with a tight deadline.
b. Yes, because the contract is for perishable Saskatoon berries and should be enforced.
c. Yes, because the contract is with a foreign company.
d. No, because the contract is for commodities.
• e. No, because the contract was novated. 12)What is the typical remedy if a party experiences a breach of contract, as in this case for BBF?
Select one:
a. Liquidated damages.
• b.
Accounting damages
C. Expectation damages.
d. Specific performance
• e.
Acceleration damages. 13)What is the remedy if a party experiences frustration of a contract, such as in this case for SBF?
Select one: a. Specific Performance to ensure the other party performs the contract.
• b.
Reliance damages to compensate for costs associated with trying to perform the contract.
• с.
Consequential damages to compensate for costs after the frustrating event occurred.
• d.
An injunction to force the other party to compensate for costs associated with trying to perform the contract.
• e.
Liquidated damages to compensate for costs associated with delay in trying to perform the contract. 14)If both parties agree that a contract does not have to be fulfilled and they prepare a written document setting out this agreement, it is called a waiver.
Select one:
• True
• False 15)[7:16 PM, 2023-12-18] Sehaj Saini: Reliance damages are used to compensate an innocent party for anticipated secondary costs associated with the breach of their contract.
Select one:
• True
• False
16)Expectation damages include the loss of expected profit and the valuation of lost opportunity as a result of a contract being breached.
Select one:
• True
• False