Seattle Shoestring Sales, Inc. arranged to sell shoestrings to Victory, Inc., a

Question

Seattle Shoestring Sales, Inc. arranged to sell shoestrings to Victory, Inc., a tennis shoe manufacturer. According to the terms of the deal, Seattle Shoestring Sales committed to sell Victory whatever number of shoestrings it will produce next year, at seventy-five cents per pair.

Since entering into their agreement, the price of cotton has skyrocketed five hundred percent. To produce shoestrings, Seattle Shoestring Sales’ cost alone will be approximately $1.50 per pair. Seattle Shoestring Sales has informed Victory that it cannot and will not honor the deal.

Is there an enforceable contract between Seattle Shoestring Sales, Inc. and Victory, Inc.? Is the failure to include a quantity term in the agreement fatal to its enforceability? What about the fact that the price of cotton dramatically increased after the companies reached their agreement? Should a court or other arbiter increase the per-pair contract price to account for the increase in the price of cotton, and then enforce the agreement?

Explanation / Answer

Enforceable contract refers to a contract that is valid; however it cannot be enforced by the court. The contract made by Seattle Shoestring Sales, Inc. and Victory, Inc. was valid. However, the consideration of the agreement would restrict the court from compelling the agreement if Seattle Shoestring Sales denies fulfilling its promise. The prime reason behind this is that in the terms of agreement specific quantity of was not mentioned. As per the agreement, Seattle Shoestring Sales is not liable to sell any specific amount.

The fact that price of cotton dramatically increased would also be considered by the court. The court or arbitrator cannot enforce the contract after increasing the per-pair contract price to account for the increase in price of cotton, due to the mentioned consideration.      

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