MEDIATION MEMORANDUM
TO: Alexis Fairchild
FROM: Marshall Petersen
DATE: June 1, 2015
SUBJECT: MEDIATION MEMO
Facts Of The Case
I met the grape producer upon visiting a local church. During our conversation, I
disclosed to him that I owned a small health food products business and that I was interested in
introducing new items to my product line. It was at that time that he informed me that his
family’s company sold Muscadine grapes, which possesses a high antioxidant quality. I agreed
to accept some samples, which went over with my customer base very well so I began to place
regular orders with the grape producer through his family’s business.
Over time my small phone orders began to increase in size. Recognizing a popular
product I began to heavily invest in advertising for this particular product. Upon reviewing my
investment cost, I thought it important to protect my investments into this product. One day the
grape producer’s son arrived with my delivery. I handed him a requirement contracts. The
contract was clear and concise. It included a guaranteed price schedule consistent to what I
was paying at that time. I explained to the son that this was needed to guarantee a continuing
business relationship. He signed the contract without any reservations and returned it to me.
Sometime later the Huffington Post released an article praising the healthy quality of the
Muscadines. Of course, this sent sales skyrocketing. I was shocked when I received a call
from the grape producer notifying me that he would no longer be my supplier because he was
accepting an output contract with a company out of Texas.
Contract At Issue – Summarize Material Terms
The requirements contract was concise and to the point. It stated that the grape
producer would continue to sell the requested amount of Muscadines product at the
guaranteed price schedule that I was paying currently. This contract guarantees that should
the stock in Muscadines be increase, my company would be protected and I could continue
paying the amount that I had been paying initially. Section 2-396(1) of the Uniform
Commercial Code provides that for a contract that does not specify a minimum level of
purchases, the purchase obligation is determined by such actual requirements "as may occur
in good faith." (Defense Counsel Journal, 2000) I wanted to enter into this agreement to
protect both businesses, that I would continue to do business with the grape producer and he
in turn would keep my prices at the level that I was currently paying.
Legal Issues
The signature on the requirements contract obligated the grape producer to fulfill my
orders at the guarantee price schedule. It was our practice since before the stock in
Muscadine grapes rose due to the article published in their favor. His acceptance of the
output contract with another company is a failure preventing him from being able to fulfill
his end of the bargain therefore leading to a breach in contract. This is unfair to me and put
my company at a loss because we would now have to find a new company to supply our
product needs. However with the publication of the article product costs will now be
significantly higher than we actually budgeted for based on the agreement we had with Mr.
Petersen’s company.
Requested Remedies
We petition the court to provide relief to our company due to the income loss as a result
of this breach of contract. We are asking the court for compensatory damages:
Expectation Damages: We request a financial relief to cover what we expected to
receive from this company. We expected to continue to receive the Muscadines at
the set price from this company. Sending us to purchase from other companies
AFTER the publication of such an article is subjecting our company to higher
product costs. We feel that after being such a loyal customer to this company since
the beginning of our business relationship, this is an unfair position in which they
choose to place us just because they wish to pursue a more lucrative deal with a
bigger company.
Consequential Damages: We also request that we be awarded financial relief in the
area of consequential damages. Due to the now skyrocketed price of Muscadines as
a result of the popular article, our profit margin has been compromised due to this
contract breach.
Conditions Under Which Settlement May Be Achieved (Where Compromise Is Possible)
Although I am thoroughly disappointed in Mr. Petersen’s willingness the break the
agreement made between our companies, I am willing to negotiate damages made payable to
my company in an attempt to compromise with the grape producer. The amount of damages
would be calculated using the reliance measurements. Under the reliance measure, the grape
producer would compensate my company for my reliance expenditures and returns to the other
party payments made to him. This would put us back in the position we were in before we
made a contract. (Shavell, 1980)
Considering that I met Mr. Petersen in a Sunday school class where he was trying to
share his faith with me, I find it immoral that he chose to fail to perform even if he is ordered to
supply our company with expectation damages. (Shiffrin, 2009). This bible that he teaches
about weekly states A man who makes a vow to the lord or makes a pledge under oath must
never break it. He must do exactly what he said he would do. (Numbers 30:2 New Living
Translation). Mr. Petersen’s company’s signature signifies them giving us their word. This is
the same as a written contract in God’s eyes. As a Christian, honest means everything to the
Lord. Mr. Petersen should understand that this was a contract that he made with me and he
must keep his word because this is what would please the Lord.
References
Shavell, S. (1980). Damage measures for breach of contract. Bell Journal Of Economics, 11(2),
466-490.
Shiffrin, S. (2009). COULD BREACH OF CONTRACT BE IMMORAL?. Michigan Law
Review, 107(8), 1551-1568.
The Requirements Contract That Isn't. (2000). Defense Counsel Journal, 67(3), 403.
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