Legal Issues in Business - Essay Example

As the plaintiff had to purchase concrete from a different supplier at higher prices, the cost differentials were charged on the defendant and were deducted from the dues. The plaintiff allowed the defendant to resume supply on a condition that the supply would come only from a single plant. On resuming the supply, the defendant failed to supply the ordered quantity of concrete on numerous occasions (at least 42). Shortage of raw materials and plant breakdowns were the two primary reasons cited and on some occasions no reasons were cited by the defendant for non- or short supply of concrete.

The plaintiff was again forces to purchase concrete from a different supplier and again at higher prices. The plaintiff charged the defendant for cost differentials and deducted it from the outstanding dues. The defendant on the other hand, maintained events leading to non- or short supply of concrete would fall under Force Majeure and hence the defendant was not liable for the cost differentials. The defendant had to suspend supply of concrete due to plaintiff’s non payment and deduction of cost differentials from outstanding dues. . 2.

Analysis Issues Following are the issues that were raised in the trial court and respective findings that the court has to decide on: Issue (a): Was the contract “sole supplier” or “exclusive” contract? The finding of the trial was that the contract was not a “sole supplier” or “exclusive contract”. Issue (b): Was the Plaintiff’s claim for cost differentials, incurred due to purchase from an alternate supplier to due defendant’s inability to meet quality requirement, during the suspension period justified and allowed?

The finding of the trial court was that the Plaintiff was not allowed to claim cost differentials during the suspension period. Issue (c): Can the defendant use force majeure clause to exempt itself from the liability for non- or short supply? The finding of the trial court was that shortage of raw materials would fall under force majeure but not plant breakdown. Hence, the defendant was liable only non- or short supply due to plant breakdown. Issue (d): Is the defendant entitled to suspend the supply?

The finding of the trial court was that the defendant was entitled to suspend the supply. Issue (e): Was the Plaintiff entitled to terminate the contract? The finding of the trial court was that the Plaintiff was not entitled to terminate. The Plaintiff has appealed against all findings of the trial court. Judgement Following is the judgement of the court on the respective issues. The authorities that have been followed and distinguished have been discussed accordingly: Issue (a): The judgement arrived was that the contract was not a “sole supplier” or an “exclusive” contract.

The judgement was reached based on the reasons that there was no mention in the contract being an “exclusive one’ neither was