Question

Assume your employer, Company A, entered into a contract with Company B to supply 10,000 Widgets and that the contract meets all of the requirements to be binding upon the parties. On the date that delivery is required, Company B contacts Company A and advises them that the widgets will not be available. Assume Company B is in breach. What are Company A's options? What would you recommend to your management team on how to proceed?"

Answer 1

A contract signed between the two parties imposes certain obligations which has to be fulfilled by the parties entering the contract. A 'Breach' of contract is a situation where one party fails to to fulfill any of its obligations. As stated in the question, Company B informed the Company A that the order would not be available on the date of delivery. In this situation, Company A has following options:

1. Company A can seek further details about the status of the order to assess how many widgets Company B can supply at the delivery date. If Company B has completed the order partially, Company A can provide further extension to Company B for a week or 15 days or a month upon their written request.

2. In case, Company B has not begin production of widgets at the delivery date, Company A can seek reasons behind the failure of delivery. Company A can terminate the contract with Company B after receiving the information as Company B has failed to fulfill their obligation. Company A can give the order of widgets to a new company. However, this will consume more time and effort.

3. Company A can take legal action against Company B for breach of contract, Company A can file civil lawsuit against Company B seeking damages or losses caused by Company B's failure to fulfill its obligation on time. However, legal action also requires time and effort.

The most feasible option would be option (1) as the other options will take time, money and effort of Company A.