The Smalltown Sawmill Entered into a Contract with the Little

question 10

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 which 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:

Interest Rate

The percentage of a loan amount charged by a lender to a borrower for the use of assets, which can vary based on factors like inflation, the time value of money, and the risk involved.

Loanable Funds

The market where savers supply funds to borrowers, typically through financial intermediaries.

Quantity Supplied

The total amount of a specific good or service that producers are willing and able to sell at a given price, during a certain time period.

Pension Program

A financial arrangement designed to provide individuals with an income when they are no longer earning a regular income from employment.