Breach of Contract: Case Study
Introduction
This case study discusses the contract Donna signed with Sweet-Ums Inc. concerning the timely delivery of pasteurized egg whites and toasted vanilla sugar. The issue is whether Sweet-Ums breached the contract and failed to deliver the products before the required date. The company’s inability to provide Donna with the needed products on time led to significant damages and loss of clients.
Analysis
It is necessary to apply expectation damages to Donna’s case, divided into compensatory, consequential, and incidental damages. Compensatory damages should be paid for the contract breach when the company fails to deliver products before the promised date. The company should compensate the party that does not breach the contract of the contractual bargain. Consequential damages, in this case, is the disputable category that supposes the potential financial and reputation losses caused by the contract breach. In Donna’s situation, Sweet-Ums cannot deliver products to her, which leads to the loss of old clients and her inability to complete the orders during the high season. The seller could objectively evaluate the lack of possibility of delivering the products on time, but they still signed the contract and sold Donna sugar and eggs. From this point of view, the reasons for breaching the contract were foreseeable. At the same time, Donna is unsure about the amount of loss because she does not know how many clients she has lost. She could not also prevent these damages because these products cannot be bought in advance.
The rule about incidental damages applies to Donna’s case because Sweet-Ums is responsible for compensating the indirect expenses described in the contract. Among these aspects are commercial charges that are reasonably justified and problems that occurred in the transportation of the goods. Even though these aspects are not mentioned directly in the contract, they are related to the case discussed, and Sweet-Ums should compensate them. Special damages are another category that is connected with Donna’s situation. They include the emotional harm Donna experienced resulting from the company’s failure to deliver products in a timely manner. At the same time, applying the punitive damages category to this situation is impossible because they are not mentioned in the contract.
Several contractual damage provisions allow the client to control potential damages. The first is the liquidated damage clause, which supposes compensation if the breaching party is unable to comply with their obligations. At the same time, the exculpatory clause assumes that the breaching party can have a justified reason for the breach, and in this case, the compensation is disputable. There is no information concerning the reasons that did not allow Sweet-Ums to deliver the products on time, which will enable us to assume that the causes of the breaching could be justified. The force majeure could occur, and Sweet-Ums was physically unable to provide Donna with the products she ordered. The rule of indemnity clause supposes that Sweet-Ums is not responsible for breaching the contract if it happened due to the actions of the third party. For example, the suppliers of sugar or eggs failed to deliver these products on time to the company. The case study does not feature this information, which allows the statement that the issue requires additional investigation in court.
Therefore, Donna has the right to compensation from Sweet-Ums because their inability to deliver products on time, as mentioned in the contract, led to significant losses. It includes the financial and emotional harm from breaching the contract Donna experienced. Donna’s arrangement features the conditions and the due date, which makes the document requirements clear and objective. Even though there is no information about force-majeures that did not allow the company to deliver Donna products, it is assumed that the non-performance was the failure of Sweet-Ums. Therefore, the fact that Donna did not receive eggs and sugar before May 29 justifies her claims against Sweet-Ums.
As the party that suffered significant losses, Donna can claim compensatory damages from Sweet-Ums. She suffered from the loss of income during the high season due to the mistake of Sweet-Ums. In addition, Dona had to buy sugar at a higher price because Sweet-Ums breached the contract, which is the consequential damage. Incidental damages include Donna’s attempts to retain her clients and the need to buy more expensive ingredients. There is also the possibility to claim that the emotional suffering Donna experienced because of Sweet-Ums’ non-performance led to significant stress. Donna lost many old clients, and other customers were dissatisfied with her services. It is necessary to mention exemplary damages that Donna can claim in court because Sweet-Ums breached the contract regardless of precise requirements concerning the due date of delivery.
Conclusion
The analysis shows that Sweet-Ums is responsible for Donna’s losses. They failed to deliver the products she ordered at the particular time, which was a critical point in the contract they signed. The company breached the agreement, and their non-performance led to the client’s significant financial and emotional losses. Therefore, Donna has the right to monetary compensation in this case, and Sweet-Ums should satisfy her claims.