Reference no: EM133150751

Friendship in Business

Asia Pacific Sugar and Sweets Manufacturing Company ordered molasses from Philippine-Hawaiian International Sugarcane Incorporated on Nov. 5, 2000. When the time for payment came, Asia Pacific Sugar and Sweets Manufacturing Company was not ready to pay due to tight financial crisis it was experiencing. Mr. Rolando Gutierrez, the manager of the said company is a friend of Mr. Frederick Dy, the owner of Philippine-Hawaiian International Sugarcane Incorporated. He talked with Mr. Dy and asked him if it was all right for the payment to be delayed. For friendship's sake, Mr. Dy agreed, It was only 20 days afterwards that the buyer offered to pay. The seller accepted the overdue account and started delivering the molasses. Upon receiving the second shipment, te production manager of Asia Pacific Sugar and Sweets Manufacturing Company reported to Mr. Gutierrez that the molasses did not meet the indicated quality in the invoice. Mr. Gutierrez, ordered the molasses to be returned. Enclosed in the invoice was a memorandum citing the reasons why it was returned. This action enraged Mr. Dy. Immediately, he canceled the contract and argued that the delay of payment was a form of "breach of contract"

Questions:

1. Was the action of Mr. Dy to cancel the contract legally correct and morally justified?

2. Is it appropriate to extend friendship in business transactions? why or why not? Discuss your answer