3. Cloud Catering Ltd ('Cloud Catering') is a company registered and trading in New South Wales. Its business is to provide catering services, such as pre- packaged inflight meals, to airlines. Big Jet Airlines Ltd ('Big Jet') approaches Cloud Catering to discuss catering for some of its flights. It informs Cloud Catering that it is about to commence new routes to Bali and Fiji, each with three flights per week, and it promises Cloud Catering exclusivity on those two routes.

The two parties then sign a written contract, dated 1 February, which includes the following terms:

(i)Exclusivity.CloudCateringwillbetheexclusivecaterer,andwillsupply all meals required, on all new routes started by Big Jet over a period of 1 year.

(ii)Orders. Weeks will be counted as running from Monday to Sunday inclusive. By noon on Friday each week, Big Jet must nominate the number and type of meals required for flights in the following week.

(iii)Delivery. Cloud Catering will deliver the meals as specified in clause 2 at least three hours before the scheduled departure time for each flight.

(iv)Payment. Big Jet will, by Sunday of each week, pay Cloud Catering for all meals delivered in that week, according to the prices contained in Schedule 1 to this agreement.

The parties commence performance on Friday, 2 March. Big Jet makes a nomination on that day and Cloud Catering begins to make deliveries on the following Monday. Performance goes smoothly until Sunday, 18 March, when Big Jet pays only half of the sum due for that week. Cloud Catering sends a note to Big Jet about the shortfall but continues the catering services.

On the following Friday (23 March), Big Jet fails to make a nomination under cl 2. Cloud Catering contacts Big Jet on Sunday afternoon (25 March) to insist on a nomination for the coming week; it also notes that Big Jet has not made any payment for the present week. Big Jet makes a nomination later that day but does not pay. The late notice means that Cloud Catering completely misses the first delivery of meals required for a flight on Monday 26 March. Cloud Catering makes the second delivery (on Tuesday) only 30 minutes before that flight departs. There is insufficient time to heat the meals on board the aircraft; they are served lukewarm, rather than hot as they ought to be. As a result, some passengers suffer food poisoning and threaten Big Jet with legal action. The third delivery for that week (on the Thursday) is on time.

Big Jet does not make a nomination on Friday, 30 March. On Saturday, 31 March, it informs Cloud Catering that it is 'considering other options'. During that discussion Cloud Catering learns that Big Jet is starting a new route to Bali, but that the route will be serviced by a different caterer.

It is now midday on Sunday, 1 April. No further payment has been made by Big Jet.

Advise each of Big Jet and Cloud Catering, respectively,in relation to its rights (if any) to terminate the contract