Question

Lets put your knowledge to the test and see if you can answer the questions related to this hypothetical: Flower'a'Day, Inc. is a California corporation. Grower's Corp. is a Mexican corporation. Big Movies, LLC is a registered with the California secretary of state. On September 1st, Flower'a'Day and Grower's orally agreed that Flower'a'Day would purchase 500 Thanksgiving Lilies on November 15th at a cost of $20.00 US per lily. Additionally, Grower’s agreed to cut and overnight ship the lilies on November 15th. Flower'a'Day provided Grower’s with a $10,000 letter of credit from Bank of America. Thanksgiving Lilies are rare, growing only in Mexico. They only bloom from November 1st to November 30th of each year. Grower's expected to make a $10 profit on each lily. To insure that it can meet its shipping obligations, Grower's pays Carrier4U a $50 shipping reservation fee. Flower'a'Day ordered the lilies from Grower’s in order to fulfill its contractual obligations with Big Movies. Under their oral agreement, Big Movies will purchase 250 floral arrangement from Flower'a'Day at $1000 US per arrangement. Big Movies specifically requested that Thanksgiving Lilies be included in the floral arrangements for its star-studded holiday movie premier on November 17th in Hollywood. Earlier on May 14th, the floral workers union demanded a 15% wage increase from Flower’a’Day. The collective bargaining agreement (CBA) expires on November 4th. Negotiations reached an impasse on September 14th. The same day, the union members approved and gave notice of their intent to strike. On November 14th, Flower'a'Day workers go on strike. Despite high unemployment, Flower'a'Day cannot find a sufficient number of replacement workers to run at full capacity. The afternoon of November 14th, Flower'a'Day calls and advises Grower's and Big Movies in separate calls that it will not be performing its contracts. During its call, Grower's states that it is ready, willing, and able to provide the lilies. After the call, Grower's scrambles to find another buyer for the lilies. The new buyer agrees to pay $15 per flower but does not require overnight shipping. Grower's spends one hour calling prospective purchasers and finalizing the new contract. On November 15th, Grower's cuts and ships the lilies to the new buyer. Just before the close of business on November 15th, Big Movies calls Grower's and offers to purchase the lilies directly from Grower's for $20 per lily. Grower's responds that the lilies have already been resold and shipped. Grower's next calls Flower'a'Day and demands payment in the amount of $2500. Flower'a'Day refuses stating it knows that Big Movies was willing to buy the lilies for full price.

Does common law, UCC, or CISG govern the contract between Flower'a'Day and Grower's?

Is it an enforceable contract?

What are the purported terms?

Does Big Movies have any rights under the purported contract as a third party beneficiary?

Does Carrier4U have any rights under the purported contract as a third party beneficiary?

Does common law, UCC, or CISG govern the contract between Flower'a'Day and Big Movies?

Is it an enforceable agreement?

What are the purported terms?

Does Grower’s have any rights under the purported contract as a third party beneficiary?

Is Flower'a'Day discharged from performing due to impossibility or impracticality?

Does Flower'a'Day's conduct constitute an anticipatory breach of contract?

At what point does Grower’s tender performance?

At what point is Grower's discharged from performing?

Did Grower's properly mitigate its damages? Why or why not?

Did Flower'a'Day properly refuse to pay Grower's damages?

Is Grower’s required to pursue litigation to collect from Flower’a’Day?

If litigation was pursued, how would damages be figured?

Answer 1

Answer 1:

Since, the corporations that are involved in the case belonged to different nations, hence the case became international and therefore, in this situation The United Nations Convention on Contracts for the International Sale of Goods (CISG) will govern the contract between Flower'a'Day and Grower's.

Answer 2:

Since the contract was not in writing, it is not enforceable in nature. Moreover, for a contract to be enforceable that involves a transaction of more than $500, it should be in writing clearly specifying the considerations of the contract.

Answer 3:

The purported terms in the contract is that Flower'a'Day cannot complete the contract as its employees have went on strike before the performance of the contract and therefore it was unable to perform for the contract by the company. As a result of this, Flower'a'Day could not purchase the order from Grower’s and could not deliver the final product to Big movies.

Answer 4:

Big movies can sue Flower'a'Day as it failed to perform for its contractual obligations and can ask for the compensation for not performing the contract that have created a damage for Big Movies in terms of the loss of time.