SoccerCo sells soccer balls to soccer leagues and was recently approached by two new teams, the Bears
Question:
SoccerCo sells soccer balls to soccer leagues and was recently approached by two new teams, the Bears and the Lions. Uncertain how many soccer balls it would require, the Bears' team manager signed a written contract that included the following:
"The Bears will purchase all soccer balls needed for the 2023 season (approximately 75-100 soccer balls) from SoccerCo @ $7.50 per ball."
When the Bears team manager subsequently placed an order with SoccerCo, he informed SoccerCo that fewer players had been recruited; consequently, the Bears needed only 50 soccer balls.
After receiving the shipment of 50 balls, the Bears received a bill for $8.50 per ball. SoccerCo contends that the Bears must order at least 75 soccer balls to obtain the $7.50 per ball price. The Bears object to the $8.50 price, saying their deal was for $7.50 per ball.
SoccerCo also contacted the Lions, whose team manager was considering several other soccer ball suppliers. SoccerCo sent the Lions manager a personalized letter stating:
"I can offer you a special deal for a limited time. SoccerCo will provide 100 soccer balls @ $7.00 per ball, delivery within one week."
Upon seeing SoccerCo's letter, the Lions manager was excited about the proposed contract price and immediately mailed her acceptance to SoccerCo. Before Soccer Co. received the acceptance in the mail, SoccerCo called the Lions manager to inform her that, due to supply chain issues, it could no longer offer the special deal. The Lions think $7.00 per ball is a good deal and want to enforce the contract.
- If SoccerCo files a lawsuit against the Bears seeking damages for breach of contract, who is likely to prevail? Discuss.
- If the Lions file a lawsuit seeking to enforce the contract price of $7.00 per soccer ball, who is likely to prevail? Discuss.
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin