Ken vs. Sweet Inc. Case

Case Summary

Ken owns and operates a famous candy store. Due to high volume of sales during Christmas season, Ken contracts with Sweet Inc. to purchase 10,000 pounds of sugar which is to be delivered on or before November 15 to accommodate the high volume of sales during the Christmas season. Sweet Inc. only managed to tender the sugar to Ken on December 10. Due to the late fulfilment, Ken suffered a loss of profit as he was not able to produce enough candy to accommodate the high demand, and also loss of future profit as numerous regular customers have indicated that they would purchase candies elsewhere in the future. Whatever sugar that Ken was able to purchase cost 10cents per pound above the contract price with Sweet Inc. Ken intends to sue Sweet Inc. for breach of contract, and claiming for damages to reputation, lost profits, future lost profits and punitive damages for failure to meet the contracted delivery date. However, Sweet Inc. claims that Ken is limited to compensatory damages only.

Nature of Contract

Based on the facts presented, the six basic elements of contract have been fulfilled and therefore the contract between Ken and Sweet Inc. is valid. Ken offered to purchase 10,000 pounds of sugar from Sweet Inc. which is to be delivered on or before November 15. In Sweets Inc.'s perspective, they accepted the offer but only managed to deliver the sugar on December 10 which was about 1month later than the need-by date. Putting all the factors into consideration, the nature of the contract would be an express contract. An express contract is a contract in which all elements of a contract are specifically stated (offer, acceptance, consideration).

Damages

Ken is trying to claim Sweets Inc. for compensatory damages for the following reasons: 1) He had to turn down numerous regular customers which resulted in loss of business. 2) Some of his regular customers have indicated that they will purchase candies elsewhere in the future because Ken was not able to purchase the quantity of sugar needed to meet the Christmas orders, which caused Ken's candy store's reputation to be tarnished. Ken is claiming for consequential damages as he had to purchase whatever sugar that he could get which costs 10 cents per pound above the contract price with Sweets Inc. additionally,

In my opinion, Sweet Inc. is wrong by claiming that Ken's claim should only be limited to compensatory damages. No doubt that there is production problems and change of transportation managers at Sweet Inc., but it is their responsibility to settle their internal hitch and not allow it to affect their clients' operations. And even if they weren't able to resolve their internal hitch, common courtesy would be to inform their client beforehand that they would not be able to fulfil their order. Because of Sweet Inc.'s internal hitch, Ken was forced to purchase the sugar at a higher price which greatly lowers his profit margin.

In the event where Ken fails in his bid to claim damages from Sweet Inc., Ken would still be able to claim for nominal damages because this kind of damages reflects a legal recognition that a plaintiff's rights have been violated through a defendant's breach of duty or wrongful conduct. And in this case, it is to regain Ken's candy store's reputation.

Referencing

1. "Nominal Damages legal definition of Nominal Damages. Nominal Damages synonyms by the Free Online Law Dictionary.". http://legal-dictionary.thefreedictionary.com/nominal+damages (accessed 16/06/2012).

2. "Compensatory Damages legal definition of Compensatory Damages. Compensatory Damages synonyms by the Free Online Law Dictionary.". http://legal-dictionary.thefreedictionary.com/compensatory+damages (accessed 16/06/2012).

3. "Consequential damages legal definition of Consequential damages. Consequential damages synonyms by the Free Online Law Dictionary.". http://legal-dictionary.thefreedictionary.com/consequential+Damages (accessed 16/06/2012).

4. "express contract legal definition of express contract. express contract synonyms by the Free Online Law Dictionary.". http://legal-dictionary.thefreedictionary.com/express+contract (accessed 16/06/2012).