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In: Operations Management

In January, a buyer and a seller agreed on the sale of 10,000 pounds of tomatoes...

In January, a buyer and a seller agreed on the sale of 10,000 pounds of tomatoes to be delivered on July 1. The contract stated that the seller would set the price on June 15 and that the buyer would pay the price on delivery. On June 15, the market price of tomatoes was approximately 75 cents per pound. The seller set the price at $1.50 per pound and the buyer demanded that the price be lowered.

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Expert Solution

Each party to a sales contract is required to act in good faith. For a merchant, the requirement of good faith includes observing reasonable commercial standards of fair dealing. In this case, when the marketprice was 75 cents, the seller was arguably not acting in good faith when it established a price of $1.50.Assuming the court concludes that the buyer was not acting in good faith in setting an unreasonably high price, the merchant will be deemed to have breached the contract.

keosha answered 2 years ago
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