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Claims against contractual damages.

Apple Co. owns and manages several orchards. This year, Apple Co. has
increased its production capacity and expects a 60% higher yield. Apple Co.
was also recently certified as an ‘organic’ producer, meaning that the retail price
of its apples will increase but the shelf life will decrease. Apple Co. has
arranged to supply initial orders to various organic wholesalers across the
country, and expects that demand for its products will increase after initial
orders are filled successfully. Realising that it will be important to distribute the
harvested apples quickly, Apple Co. arranges to hire 3 refrigerated trucks from
Eighteen-Wheeler Inc. The contract between Apple Co. and Eighteen-Wheeler
Inc. states that the trucks will be collected by Apple Co. from Eighteen-Wheeler
Inc.’s depot on August 1 and will be returned 3 weeks later (coinciding with
Apple Co.’s picking season and distribution plans). In their correspondence,
Apple Co. makes it clear that the collection date is very important and that any
delay would cause disruption to their business activities. This is reflected in the
terms of their signed agreement.
Due to a late harvest, Apple Co. did not begin picking its crop until August 8,
and so it did not have the stock available to fill some of its orders that week.
Nonetheless, it arrived at Eighteen-Wheeler Inc.’s depot on August 1 to collect
the trucks as planned. Unfortunately, the trucks were not ready to collect – their
annual roadworthiness test had been overlooked, and the earliest available time
for undertaking this test was August 15. Eighteen-Wheeler Inc. was very
apologetic and offered 9 refrigerated vans instead. Apple Inc.’s manager did
not have 9 people to drive the vans and their relatively small carrying capacity
would have required multiple trips. Therefore, Apple Co’s manager declined
Eighteen-Wheeler Inc.’s offer to supply the vans and decided to wait for the
trucks instead.
Apple Co. harvested a bumper crop of organic apples from its orchards and
stored them onsite, waiting for the trucks to be ready. In the end, the trucks
were not available until August 22. During this time, the quality of the apples
deteriorated and Apple Co. needed to re-negotiate with its buyers to accept late
delivery at a reduced price (33% of the original price for all their stock). Apple
Co. did not receive any repeat business from the organic wholesalers it
supplied, as it had originally hoped.
Eighteen-Wheeler Inc. has received a letter from Apple Co.’s solicitors to initiate
the dispute resolution procedures set out in the relevant clause of the contract.
You have been retained by Eighteen-Wheeler Inc. to prepare for an upcoming
Advise your client regarding the likely basis of the claim against them for
contractual damages. Limit your analysis to claims based in contract, and you
can assume that the contract between the parties does not make any provision
for liquidated damages.

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