Class Discussion Problem # 10: Joe Johnson owns Joe’s Candy Shop in Saint Petersburg, Florida. Joe has built a thriving business over twenty years. One of the things that sets Joe’s apart in the market place is that he makes all of his products by hand. His products are distinctive because of their size and shape and colorful appearance. With the advent of the internet, Joe has enjoyed remarkable growth in his business.
Joe does approximately 80% of his business between November 15th and December 26th of each year. Therefore, he needs to begin to build inventory in late October and early November to be in a position to fill orders he will begin to receive shortly before Thanksgiving as well as the need for inventory in his shop for walk-up traffic. He orders 1,700 pounds of sugar from his supplier. He reminds his supplier that he does approximately 80% of his business in the last six weeks of the year and that it is imperative that he receive the sugar that he has ordered not later than October 31, 2016. His supplier fails to deliver the sugar on time and Joe is only able to purchase 200 pounds of sugar on the open market. As a result, Joe cannot fill any of his outstanding orders from existing customers or orders received on line. He uses the 200 pound of sugar he could obtain to maintain a limited inventory in his shop.
50. What are consequential damages and how do they differ from compensatory damages?
51. What are the special circumstances in this problem that are beyond the contract itself?
52. As a result of these special circumstances, what damages might Joe be able to obtain based upon the supplier’s breach of the contract?
53. What is the significance of the rule announced in Hadely v. Baxendale, page 375 of the textbook, and how did Joe satisfy this rule?
54. Assume that Joe could find two alternate suppliers for the sugar he needed. Assume supplier A’s price for the sugar was 20% higher than the price quoted by supplier B. May Joe purchase the sugar from supplier A so as to increase the amount of the damage award he would receive?