QUESTION 1
Bath Stuff (Bath), a retailer located in Betaville, sent Neat Scents (Scents), an importer
located in Sunville, a signed offer to purchase 1,000 individually wrapped candles at a
price of $10,000, free on board (“FOB”) Betaville. Scents promptly sent Bath a signed
acknowledgment accepting the offer, which also included the following language: “Some
shipping boxes have external water damage. Contents of shipping boxes guaranteed to
have no damage.” Bath did not respond to the acknowledgment. No other express
warranties or disclaimers were stated in the offer or acknowledgment.
Scents timely shipped the order to Bath’s warehouse using TruckCo, a third-party common
carrier, at a freight cost of $400. One-quarter of the shipping boxes showed signs of water
damage. Each shipping box contained candles that were individually wrapped for retail
sale. All candles and individual wrapping were undamaged. When the shipment arrived,
Bath’s employees noticed the water damage on some shipping boxes. They immediately
rejected the shipment without opening any boxes, promptly notified Scents of the rejection,
and refused to pay any amount.
Scents paid TruckCo $500 to ship the candles back to Sunville and notified Bath that
Scents intended to resell the candles. Scents promptly solicited bids from all of its
customers and received the best offer, which it accepted, from Redemption Candles
(Redemption) of $9,000, FOB Sunville.
Bath promptly entered into a valid written contract with Hot Candles (Hot), an importer in
Hatville, to purchase 1,000 replacement candles for $12,000, FOB Hatville. TruckCo was
engaged to transport the candles from Hatville to Betaville. In transit, TruckCo’s truck was
struck by lightning in a storm and all of the candles melted. TruckCo’s shipping contract
disavows liability from acts of God, including lightning. Bath refused to pay for the candles
and Hot refused to send replacement candles.
Bath sued Scents for breach of contract and Scents countersued Bath. Bath sued Hot for
breach of contract and Hot countersued Bath.
1.
Did Bath and Scents have a binding contract and, if so, did either party breach the
contract? If there was a breach of contract, what damages are likely to be recovered, if
any? Discuss.
2.
Has Bath or Hot breached their contract? If so, what damages are likely to be
recovered, if any? Discuss.