CONTRACT LAW FOR MANAGERS
Assignment 1: Simple Sale of Goods Contract
Mary Moocher (MM) grows strawberries of high quality. They are grown with a highly secretive and successful wetland approach, making them juicy and full of punchy flavour. The method is unique to MM. As a result, her strawberries are in high demand, particularly from makers of high end desserts.
The acclaimed TV show Celebrity Chef (CC) and the judges are fans of MM’s product. There have been numerous discussions about buying all the strawberries that MM grew in the 2019 harvesting season. If CC can buy these strawberries they have an opportunity to corner the market on supply and out-perform all rival cooking shows.
The parties have agreed on the following terms:
CC agreed to buy all the strawberries that MM grew in 2019. These are the ones that fit a description of A grade edible fruit, shiny red and juicy, the ones that MM grows with her unique wetland techniques.
It is a condition of the supply contract that CC does not reveal any of the secrets of the growing technique, or provide raw samples of the product to anyone that may result in the growing technique being discovered. This condition is to continue after supply has been completed. Nothing can be revealed about the source of the strawberries on any of CC’s shows.
The parties agree that MM will supply at least 200 punnets. CC agrees to buy all available strawberries fitting the description. This is important to CC as they need this quantity to meet the market demand - they are running a whole season focusing on strawberry culinary. It is also important as it will freeze out his competitors.
The price for the strawberries is agreed at $65 per punnet, excluding delivery. CC must pick them up from MM’s warehouse and organise his own transport. Payment must take place by month’s end for all strawberries supplied in that month. If payment is not made within 24 hours of month’s end, then MM does not have to supply any strawberries and can terminate the contract effective immediately. MM will then be at liberty to sell the strawberries to other customers.
If the amount of strawberries supplied for the season is less than 200 punnets, the price will be reduced to $40 per punnet for all strawberries supplied for the whole season.
This agreement is assignable for all or part of the supply by CC, with the written consent of MM. However, CC must seek in writing that the party taking over agrees to all the important covenants in this agreement. Any breach of the covenants means that CC will be liable for damages, as well as the assignee.
This agreement shall include an option for CC to buy all available stock from MM for the season of 2020, only if the essential terms have not been breached in this agreement by CC.
You are to draw up a contract reflecting all the aforementioned terms and conditions. Make sure you pay attention to - amongst other things - the following:
1. Identify which clauses may be essential terms.
2. Ensure you properly identify all timeframes, including timeframe for option exercise.
3. Mechanisms in the event of default.
4. Alternative dispute resolution clause.
5. This is a ‘Business to Business’ transaction and is for resupply. Therefore, note that the ACL does not apply. You should note the legislation that does apply.
This list is not comprehensive and has identified some things you may overlook. Make sure your contract is clear, fair and accurately reflects the agreement made. If you believe there are missing aspects in the instructions, you are entitled to add them to ensure the agreement is complete