Hygrade Fruit Juice Co

question 23

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 hence,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 are 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.

---

Definitions:

Deadweight Loss

The loss of economic efficiency that can occur when the free market equilibrium for a good or a service is not achieved.

Taxes on Labor

Financial charges imposed by governments on workers' income, salaries, and wages.

Elderly

Individuals who are significantly beyond the usual age for retirement, often implying an age at which they receive certain societal or economic benefits like pensions.

Deadweight Loss

An economic inefficiency arising when there's a failure to attain or an impossibility of attaining equilibrium for a particular good or service.