Question

On, February 1, 2017, Marty, the chief fruit buyer at ACME supermarket entered into a signed and written contract with Bruno, a Florida-based orange supplier, to purchase 1,000 crates of oranges for $75 per crate, to be delivered to ACME on June 1, 2017.

a.      Unfortunately, the weather in Florida was colder than usual that spring and Bruno’s orange groves produced 10% fewer oranges than in the average year. Because of the shortage, by May 15, the market price for oranges was $85 per crate. On May 31st, Bruno told Marty that he must pay $85 per crate or Bruno would not deliver the oranges. Marty sues Bruno for breach of contract and Bruno asserts “commercial impracticability” as a defense. Judgment for whom? Explain.

b.      Instead of the facts in (a), assume that an unprecedented fruit disease killed 95% of the Florida orange harvest during the Spring of 2017. By May 15, no oranges grown in Florida were available to be delivered to Marty. However, oranges grown in New Zealand were available at a price of $800 per crate. On May 31st, Bruno told Marty that he would not be able to perform the contract because he would be losing many thousands of dollars on the deal. Marty refuses to accept this and sues Bruno for breach of contract and Bruno asserts “commercial impracticability” as a defense. Judgment for whom? Explain.

c.      Later the same year, Marty decides that ACME should start selling apples. In September, he drives to an apple orchard in upstate New York to negotiate the purchase of apples. Farmer Suzie takes Marty around her orchards and shows him ten rows of Cortland apple trees. While all of the apples appear to be of high quality, Marty is very impressed with the healthy look of the apples in row 7 which gets more direct sunshine than the other rows of the orchard. Marty says to Suzie, “I offer to pay $10,000 for all of the apples in row 7 of the orchard.” Suzie accepts this offer and the contract is put in writing and signed by both parties. The apples from row 7 are picked and put into a truck for delivery to Marty. On its way to New York City, the truck suffers an accident and all the apples are destroyed. Suzie immediately gathers all the apples from row 8 in the orchard and attempts to deliver them to Marty. Marty refuses to accept delivery or to pay for the apples and Suzie sues Marty for breach of contract. Judgment for whom assuming that Marty argues “destruction of subject matter”? Explain.

Answer 1

Answer (a): Marty,the chief fruit buyer at ACME Supermarket signed contract with Bruno an orange supplier to purchase 1000 crates of oranges for $75 per crate to be delivered to ACME on June 1,2017 but due to heavy cold Bruno's orange produce is 10% less and because of this shortage by May15,the market price for oranges was $85 per crate.So Bruno's demand on May 31 to Marty for revised payment charges of $85 per crate else termination of contract as per the market fluctuation due to unpredictable event is justified due to the "Commercial impracticability" clause of Contract Law.

Commercial Impracticability means that performance under a contract is impracticable,it is not possible and can not be accomplished.

Following elements which must be proven for use of this doctrine as a defense are-

i.Unforseen event or occurrence

ii.The occurrence must make performance difficult or impossible

iii.The parties must not have been able to predict that the event would take place.

The less production of oranges was not anticipated to either parties in advance due to unpredictable geological event thus creating a sharp fall in supply of oranges resulting in rise of cost of orange plantation hence Commercial impracticability happens and the judgement should be in favor of Bruno.

Answer (b): If assumption is made that an unprecedented fruit disease killed 95% of Florida's orange harvest and no oranges at Florida was available to be delivered to Marty however New Zealand's oranges available at price of $800 per crate so now Bruno's deal for pre determined rate of $75 per crate is really not possible due to commercial impracticability as due to sharp decline of orchard plantation due to unfortunate event of plant disease creating a supply imbalance resulting an inflationary cost price rise so its not feasible for Bruno to go for pre agreed contract price of $75 per crate ,his increased cost rate should be taken into consideration and the judgement should be in favor of Bruno's argument of commercial impracticability.

Answer (c): Apple Farmer Suzie accepts to sell the apple of row 7 of his orchard at $10,000 to Marty but the destruction of those apples being carried by truck due to accident and refusal of Marty to Suzie's offer to present apples of another row 8 of his orchard is acceptable as per Contract Law on the ground of "destruction of Subject matter" .

>'Destruction of subject matter' is an essential to the offer.

>Destruction of something essential to the contract also terminates the offer.

> If anything critical for continuation of the contract gets destroyed before the offer is accepted then the offer is terminated.

In this case the transport carrier which was the crucial element of getting the offer executed got destroyed due to accident therefore Marty's argument for "Destruction of Subject Matter " is solid ground in getting his contract with Suzie getting termed as invalid contract.