Reference no: EM131623256
REVISION PROBLEM ONE
Astrid is the senior purchasing officer of FoodCo Pty Ltd, a company that makes and markets various food products. Astrid meets with Ben, the sales manager of GlassCo, a company that manufactures glass products.
Astrid says to Ben: "Can you supply FoodCo with 200,000 standard bottling jars?"
Ben replies: "Yes, we can supply you."
Astrid says: "I would prefer jars that contain some recycled glass."
Ben replies: "Our jars are made with up to 10% recycled glass."
Ben and Astrid then both sign a written contract. It states that Ben's company agrees to supply FoodCo Pty Ltd with "200,000 standard bottling jars for a price of $10,000". The contract also states: "The jars must be delivered to the buyer within 10 days of this agreement." There are no other terms in the written agreement.
The 200,000 jars are delivered on time and FoodCo pays for them. But when FoodCo tries using them to bottle jam, the jars crack as soon as the hot jam is poured in. Astrid discusses this problem with Ben. He says that standard jars are successfully used for many food products (which is true), but they are not thick enough to resist the high temperature of freshly made jam.
Astrid discovers that the jars delivered to FoodCo were made with only 2% recycled glass. She says this is not what was expected. And, since the jars are useless for bottling jam, Astrid says FoodCo does not want to keep them. Astrid wants to return the jars to Ben and get back the money FoodCo paid for them.
1. Is it a breach of contract that the jars only contain 2% recycled glass?
2. Can Astrid reject the jars on the basis that they are not appropriate for bottling hot jam?
Assume that GlassCo is in breach of a contractual term that the jars were heatproof. As a result of them not being heatproof, FoodCo is unable to bottle a batch of jam which has cost $5000 to make. FoodCo offers to sell the whole batch to a biscuit maker at cost price, but the biscuit maker will only pay $2,000. If the jam had been bottled, the bottled jam would have been sold to retailers for $10,000.
3. How much can FoodCo claim in damages for breach of contract?
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