Hygrade Fruit Juice Co

question 17

Essay

Hygrade Fruit Juice Co. entered into a contract with Citrus Suppliers Ltd. for the supply of orange concentrate for its juice production operation. The terms of the contract provided that Citrus would supply Hygrade with 1,000 cases of oranges at $10, per case one month later, subject to a deposit of $4,000 on signing the contract and the balance on delivery. The contract further provided that in the event of breach or repudiation of the agreement by Hygrade, the deposit would be forfeited as liquidated damages. A week after the contract was signed, a senior representative from Hygrade was meeting with a broker from Citrus on a particular matter when their discussion degenerated into an argument that culminated with the representative from Hygrade saying "We've suffered along with your substandard product long enough. We've paid you too much in the past and you're ruining the reputation of our juices. Are you getting this next shipment from the same source?" The citrus representative responded affirmatively. "Then you can just stuff the next shipment." At that, the representative from Hygrade left.
The fruit to be supplied to Hygrade was costing Citrus $5,000 from their source in Florida, USA. Taking the actions of Hygrade as repudiation, Citrus commenced negotiations with Cake & Cookie Co. for their purchase of the fruit. Cake & Cookie required the fruit for flavouring certain of their products, but certainly did not require high-grade fruit. As this was the case, regardless of the quality of Citrus's offering, Cake & Cookie was prepared to offer only $5,000 for the shipment to take it off Citrus's hands. At the time, other juice manufacturers for whom the fruit was suitable were offering $9,000 for a similar product. On learning of the impending sale between Citrus and Cake & Cookie, Hygrade immediately brought an action for an injunction against the sale and a return of their deposit, which they alleged was not liquidated damages. Citrus immediately filed an action against Hygrade in response, holding on to their $4,000 deposit and suing Hygrade for the $1,000 of lost profits that would have been generated by a sale to Hygrade. Discuss the arguments that will be raised by the parties and render a decision.
D.L.R. (3d) 1.

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Definitions:

Variable Rate

An interest rate that can change over the period of a loan or mortgage based on underlying benchmark interest rates or indices.

Financial Risk Management

The method of safeguarding a company's economic value through the utilization of financial tools to control exposure to risks, notably market risk and credit risk.

Risk Profiles

Descriptions of an individual's or organization's willingness to take risks, as well as the threats to which they are exposed.

Risk Profile

A risk profile assesses the willingness and ability of an individual or entity to take risks, often used in financial planning to tailor investment strategies.