Question: April manufactures leather chairs and sofas, and is happy because she has just negotiated a contract with Bobs Fine Furnishings, Ltd., to supply them with
April manufactures leather chairs and sofas, and is happy because she has just negotiated a contract with Bob’s Fine Furnishings, Ltd., to supply them with her handmade furniture. The terms of the contract are that on the first Monday of every month, April is to send over 10 chairs and two sofas, and Bob’s Fine Furnishings will pay her $7000. She’s excited to learn that her furniture is so popular that Bob’s Fine Furnishings has a waiting list of customers who have pre-paid for their chairs, as her last shipment sold out in only a week. April is a little worried, however, as she has just received a phone call saying that her leather supplier won’t be able to send her any leather for the next three months, as there is a local shortage. Without the leather, she knows she can’t fill her order for Bob’s Fine Furnishings by the first Monday of the month, much less for the two months after that. What could April have done when negotiating the contract with Bob’s Fine Furnishings to help manage the risk of a situation like this? What should she do now that the contract’s already in place?
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