Question

In: Operations Management

Suppose you are a chicken farmer and you sign an agreement witha local chicken rotisserie...

Suppose you are a chicken farmer and you sign an agreement with a local chicken rotisserie restaurant owner to sell a large quantity of organic chickens to him every month. The written contract states that you will sell him "good quality" organic chickens. However, when you send the first shipment, the grocer comes back and says they are not high quality enough and he will not pay you. You reply that your chickens meet United States Department of Agriculture (USDA) guideline for being "Grade A" which is the highest grade you can receive, and that they are certified to meet USDA organic standards. The restaurateur claims your chickens are not of the quality he had in mind, the contract does not say anything about the USDA, and his willingness to pay depends only on his own ideas about what is good quality. What do you think should have been added to the contract to avoid this kind of dispute? Will you be able to get paid for your chickens if you file a lawsuit seeking to force the restaurateur to pay?

Solutions

Expert Solution

Answer 1) If the chicken farmer is very sure of meeting USDA guidelines then that should be reflected in the contract. Also as per the farmer also it shows that the farmer is stating that his chickens meet the USDA guidelines as per his expectations and there is no physical evidence of the same. So the contract is surely vague not indicating any actual parameters to judge quality. So mentioning the quality standards and terms of payment are very important in the contract

Answer 2) He might file a lawsuit, but since the contract was itself vague without any proper terms of standards and payment, the farmer might not get the judgment in his favor and get paid by the restaurant.


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