First Principles of Business Law

Question 9.

Assume GlassCo is in breach of a contractually binding promise that the jars were heatproof and that, as a result of this breach, FoodCo is unable to bottle a batch of jam which has cost $5,000 to make. FoodCo offers to sell the whole batch to a biscuit maker at cost price, but the biscuit maker will only offer $2,000. If the jam had been bottled, the bottled jam would have been sold to retailers for $10,000.

(a) In the circumstances, FoodCo does not have to sell the unbottled jam and can simply claim damages of $10,000 from GlassCo, which is the amount that FoodCo would have received selling bottled jam.

(b) In the circumstances, FoodCo is entitled to sell the unbottled jam for $2,000 and also claim damages of $10,000 from GlassCo, which is the amount that FoodCo would have received selling bottled jam.

(c) FoodCo can claim damages of $8000 from GlassCo, being the difference between what FoodCo would have made by selling the jam in bottles ($10,000) and what FoodCo actually received selling the jam unbottled ($2,000).

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