The following applies to questions 3 and 4: KB has contracted to deliver 100 pou

ID: 444000 • Letter: T

Question

The following applies to questions 3 and 4:

KB has contracted to deliver 100 pounds of beans to GCG every month for a year at $5 per pound. Three months into the contract, stinky coffee virus (SCV) infects all the plants of all the growers that KB works with. SCV poses no danger to humans, but changes the smell when the beans are roasted to the smell of old gym shoes.

The fourth month of the contract KB sends beans infected with SCV. GCG accepts
delivery. Upon roasting the beans in the store GCG immediately notices the smell and calls KB demanding that new beans that don't stink be sent at no charge immediately.

3) (15 points) KB refuses, explaining that these beans are perfectly safe for human consumption.

3a) What contract principle does this invoke? 3b) What is the legal rule?

3c) Applying that rule to these facts, does KB need to send new beans and, if so, what does GCG need to pay for them?

4) (20 points) KB refuses to send new beans and GCG, unwilling to sell these beans to customers, buys beans from Beans R Us (BRU), the only wholesale source of coffee beans in town. BRU charges $7 per pound, rather than the $5 that KB charged. GCG buys 100 pounds, a month's supply, and demands that KB pay for the new beans (GCG had previously paid for the shipment of smelly beans). KB refuses.

4a) What contract principle does this invoke?
4b) What is the legal rule?
4c) Applying that rule to these facts, does KB need to pay for the new beans?
4d) What if BRU sold only organic coffee beans and GCG paid $10 per pound for the 80 pounds - what, if anything, would KB need to pay?

The following applies to questions 5 and 6:

The next month KB obtains beans from different farmers (whose plants are SCV free). KB is forced to pay $6 per pound for the new beans, $1 more than it is selling the coffee to GCG.

5) (20 points) KB asks for a price increase. GCG refuses. KB then refuses to deliver that month's shipment.

5a) What contract principle does this invoke?
5b) What is the legal rule?
5c) Does KB have to deliver the beans to GCG while still charging GCG only $5 per pound? 5d) What, if anything, can GCG do if KB does not deliver?
5e) Would this be different if they were not monthly deliveries and, if so, how?

6) (20 points) KB asks for a price increase to $7 per pound. GCG agrees and sends a memo saying so. But when the bill comes at the new higher price GCG refuses to pay the new price, saying it shouldn't have to and should just have to pay the contract price.

6a) What contract principle does this invoke?
6b) What is the legal rule?
6c) Applying that rule to these facts, what price does GCG need to pay for the beans? 6d) Does it matter that these are coffee beans rather than a service and, if so, how?

The following applies to 7 and 8:
GCG has signed a contract with Frederick von Flutenburg (FVF), the world's expert in coffee

drink creation, to create a new line of specialty drinks for its new coffee business. They agreed that FVF would start working in October at a cost of $100,000 per drink created and create 10 drinks. After the contract was signed, the two sides learned that they were talking about different years. FVF is booked so far in advance that he plans bookings more than a year ahead. He thought GCG was planning for him to come in October 2016, when in fact GCG wanted FVF to come in October 2015, to create drinks before the new coffee shop opens.

7) (20 points) The two sides both argue that the contract should be interpreted their way. 7a) What contract principle does this invoke?

7b) If GCG is unwilling to wait a year for FVF to come does it still need to pay him? Why or why not.
7c) Can GCG force FVF to come this year? Why or why not?
7d) What will happen to the contract?

8) (20 points) GCG agrees to wait a year for FVF's services - he's that good. Unfortunately, in late September 2016, FVF gets in an accident and is in a full body cast. He will have to stay that way for the next few months and is unable to create any drinks while in the cast.

8a) What contract principle does this invoke? 8b) What is the legal rule?
8c) What will happen to the contract?

FVF tells GCG that his nephew, Herbert von Flutenburg (HVF), will do the contract in his place. HVF has never had a paid contract for coffee creation before, but he is FVF's favorite nephew.

8d) What contract principle does this invoke?
8e) What is the legal rule?
8f) Does GCG have to allow Herbert to fulfill the contract? Why or why not?