Business Law Case Study
Scott Restaurant Company purchased a commercial freezer from Big Refrigeration Company. The written contract between Scott Restaurant Company and Big Refrigeration Company provided that Scott Restaurant Company would pay Big Refrigeration Company $5,000 for an Arctic Air commercial freezer and an additional $1,000 for delivery and installation of the commercial freezer. Write a case study that considers the questions below.
– Is this contract subject to Article 2 of the Uniform Commercial Code (UCC)? Why, or why not? Does it make a difference if Scott Restaurant Company or Big Refrigeration Company are merchants? Why, or why not?
Next, consider that Big Refrigeration Company delivered an Admiral Craft commercial freezer to Scott Restaurant Company on the date the contract required but, before the freezer was installed, a representative of Scott Restaurant Company recognized that the freezer that was delivered was not the brand that the contract specified.
Include responses to the questions below in your case study.
– Did Big Refrigeration Company breach the contract?
– Why, or why not?
– If there was a breach of contract, what can Scott Restaurant Company do about the breach of contract?
Answer:
Case Study: Scott Restaurant Company v. Big Refrigeration Company
Scott Restaurant Company, a local eatery, entered into a written contract with Big Refrigeration Company for the purchase of a commercial freezer. The contract stipulated that Scott Restaurant Company would pay $5,000 for an Arctic Air commercial freezer and an additional $1,000 for delivery and installation. However, upon delivery, Big Refrigeration Company provided an Admiral Craft commercial freezer instead of the specified Arctic Air brand.
Is the Contract Subject to Article 2 of the UCC?
Yes, this contract is subject to Article 2 of the Uniform Commercial Code (UCC). Article 2 of the UCC governs the sale of goods, which includes transactions involving the sale of commercial freezers. Both Scott Restaurant Company and Big Refrigeration Company are engaged in the business of selling goods, making them merchants under the UCC. Therefore, the UCC applies to their transaction, providing rules and standards for the sale of goods.
Did Big Refrigeration Company Breach the Contract?
Yes, Big Refrigeration Company breached the contract by delivering a freezer that was not the brand specified in the contract. The contract clearly stated that Scott Restaurant Company would receive an Arctic Air commercial freezer, but Big Refrigeration Company provided a different brand, the Admiral Craft commercial freezer. This constitutes a material breach of contract as the delivered goods did not conform to the agreed-upon terms.
What Can Scott Restaurant Company Do About the Breach of Contract?
Scott Restaurant Company has several options to address the breach of contract:
- Demand Specific Performance: Scott Restaurant Company can demand that Big Refrigeration Company deliver the Arctic Air commercial freezer as originally contracted. However, this remedy may not be practical if the specific freezer is not available.
- Seek Damages: Scott Restaurant Company can seek damages for the breach, including any financial losses incurred as a result of receiving the wrong freezer. This may include the difference in value between the delivered freezer and the contracted freezer, as well as any additional costs associated with the breach, such as installation fees for the incorrect freezer.
- Rescind the Contract: Scott Restaurant Company may choose to rescind the contract altogether due to the material breach by Big Refrigeration Company. In this case, Scott Restaurant Company would return the delivered freezer and seek a refund of the purchase price paid.
- Negotiate a Settlement: Scott Restaurant Company and Big Refrigeration Company may negotiate a mutually acceptable resolution to the breach, such as a partial refund or replacement of the incorrect freezer with the correct brand.
In conclusion, Big Refrigeration Company’s delivery of the wrong brand of freezer constitutes a breach of contract, and Scott Restaurant Company has various options to pursue remedies for the breach under Article 2 of the UCC.
