BA 113 Case Study #2
Aligns to SLO 2
Note: This case covers material in Ch.13
Mel's Pizza Supply signs a contract to buy 500 pounds of dough from Giovannis, a small organic food manufacturer, as long as an
independent organization inspects the dough and certifies that it contains no preservatives or gluten. Mel's has a contract with several
restaurant chains to supply dough and intends to use Giovannis dough to fulfill these contracts. While Giovannis is preparing a batch of
dough, a machinery malfunction destroys the product. Giovannis attempts to purchase gluten and preservative-free dough from other
manufacturers, but the price is twice the normal market price. Giovannis is too small to absorb this cost and immediately notifies Mel's that it
will not fulfill the contract. Using the information presented in the chapter, answer the following questions.
1. Suppose that the dough does not pass the preservative/gluten inspection. Which concept discussed in the chapter might allow Mel's to
refuse to perform the contract in this situation?
2. Under which legal theory or theories might Giovannis claim that its obligation under the contract has been discharged by operation of law?
Discuss fully.
3. Suppose that Giovannis contacts every dough manufacturer in the country and buys the last remaining preservative-free and gluten-free
dough anywhere. Nevertheless, it is only able to ship 450 pounds to Mel's. Would this fulfill Giovannis obligations to Mel's? Why or why not?
4. Now suppose that Giovannis sells its operations to Heaven's Best. As a part of the sale, all three parties agree that Heaven's Best will
provide the dough as stated under the original contract. What is this type of agreement called?