The Smalltown Sawmill Entered into a Contract with the Little

question 45

Essay

The Smalltown Sawmill entered into a contract with the Little Lumber Co.to supply the sawmill with logs.The sawmill produced a great deal of softwood lumber,particularly pine,for furniture making.The mill especially liked the logs supplied by Little Lumber Co.because they were from older stands of trees,which made the wood a higher quality.Little's logs were also somewhat larger,which made for less waste when cutting the larger pieces of wood required for furniture making.There was a written agreement between the parties that stipulated that the parties "for themselves,their executors and administrators and successors respectively" each covenanted to abide by and perform the terms of the agreement.The relationship continued over several years until the Little Lumber Co.assigned its rights under the agreement to another lumber company,Logs Ltd. ,which carried on the supply.The sawmill accepted shipments from Logs Ltd.for nearly a year when it decided not to accept any further shipments on the grounds that the contract it had with the Little Lumber Co.was not assignable.
The Little Lumber company decided to take legal action to enforce the agreement on the sawmill.Explain the nature of the action taken and the legal principles the lumber company would rely on.What arguments would the sawmill raise in its defence? Render a decision.

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Definitions:

Annual General Meetings

Mandatory yearly gatherings of a company's executives, directors, and shareholders to discuss the company’s performance, its future, and to vote on key issues.

Dilution

A reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.

Business Combination

A transaction or event in which an acquirer gains control over one or more businesses, typically involving mergers, acquisitions, or consolidations.