Lode Mines Enters into a Contract with Ajax Photo Labs,whereby

question 29

Multiple Choice

Lode Mines enters into a contract with Ajax Photo Labs,whereby Ajax agrees to purchase all its requirements of silver needed for photo finishing during the next year,from Lode,at $4.00 per ounce.Over the last 4 years,Ajax has used an average of 10,000 ounces of silver per year.Lode only produces about 15,000 ounces of silver per year.About 2 months into the contract,the price of silver skyrockets to $50 per ounce.Ajax immediately orders an additional 50,000 ounces from Lode.Lode refuses to deliver,and Ajax sues.What is the most likely outcome?

• A)Lode wins;requirements contracts are not enforceable because they do not contain a quantity.
• B)Ajax wins;requirements contracts are enforceable.
• C)Lode wins;even if requirements contracts are enforceable,the parties must act in "good faith," and Ajax is acting in bad faith.
• D)Ajax wins;they are acting in "good faith," and this was a risk that Lode assumed.

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Definitions:

Work Cell

A layout arrangement in manufacturing designed to improve efficiency by grouping together all necessary resources to complete a product or task.

Staff Demand

The required number of employees needed to meet the operational needs of a business.

Plant Operation

covers the activities involved in the daily running of a manufacturing or industrial facility, including production, maintenance, and ensuring that the plant meets output and quality goals.

Cycle Times

The total time from the beginning to the end of your process, as defined by you and your customer, which could include production and processing time.