Cameron is opening a coffee museum in Los Angeles, where he plans to exhibit 100,000 of rare, luwak coffee beans. To source these beans, he called over his colleagues in the coffee industry, where he connected with Janice, who owns a coffee distribution company and has 100,000 of these luwak coffee beans in stock. Cameron is excited to meet Janice and talk about purchasing these beans. After calling Janice, Cameron went to her office, where Janice offered to sell the 100,000 coffee beans for $4,500. Cameron agreed to purchase the beans from Janice, on the condition that these beans must arrive at his museum on Sunday, 1 December 2019, the day before the opening of his coffee museum; Cameron’s coffee museum was planned to be open on Monday, 2 December 2019. It was noted in the contract that without Janice’s beans, Cameron could not open his coffee museum. Cameron and Janice printed and signed the agreement. On Monday morning, 2 December 2019, Cameron was shocked to see Janice’s 100,000 beans nowhere to be found at his museum. He panicked and called ten other suppliers, but he could not find any other capable supplier. He was unable to open his coffee museum then. Finally, Cameron found Jack, the one and only, substitute supplier who could supply these beans; Jack’s selling price is $6,000. In addition, Jack could only deliver these beans on Thursday, 5 December 2019; Cameron could start using and exhibiting these beans at his museum on Friday, 6 December 2019 then. Cameron could have received $750 in profits daily since his opening day, and he would only lose four days of profits if he were to deal with Jack. Not wanting to lose more time and incur more losses, Cameron agreed to Jack’s offer and purchased these beans for $6,000; Jack delivered the beans accordingly. Cameron is now suing Janice for all the damages.

A. Is there a contract between Cameron and Janice?

B. Is there a breach of contract?

C. What are the damages owed by Janice?

A. A contract is an enforceable agreement that contains these elements:

1. An agreement
2. Consideration
3. Capacity
4. Genuine assent
5. For a legal purpose

B. A breach of contract is a failure, unexcused non-performance of any promise that forms part of all of the contract.

C. There are two damages related to breach a contract: Compensatory damages and Consequential damages.

1. Compensatory damages: for the harms that are direct result of another party’s breach .
2. Consequential damages: indirect harms; they can be recovered as long as they are foreseeable by the breaching party . Duty to mitigate damages applies when seeking consequential damages; a party must reduce or keep low damages to recover the consequential damages.

A. There is a valid contract; all elements are present.

1. An agreement: Cameron and Janice had valid offer and acceptance.
2. Consideration: Both parties agreed to give up; Cameron paying Janice, and Janice supplying beans to Cameron.
3. Capacity: There is no condition suggesting there is incompetency.
4. Genuine assent: There is no condition suggesting there is duress or fraud.
5. For a legal purpose: There is no condition suggesting illegal activities.

B. There are no stated facts or conditions that suggest Janice’s performance is impossible to conduct. From the stated conditions, non-performance is unexcused.

C. Damages:

1. Compensatory damages: The difference from substitute supplier (Jack) - contracted price (Janice): $6,000 - $4,500 = $1,500
2. Consequential damages: - These damage are owed to Cameron as they are foreseeable by Janice; it is specifically noted and agreed that Cameron would need Janice’s coffee beans to run his coffee museum. - Cameron also held his duty to mitigate damages; he tried searching for substitutes as soon as possible and settled with Jack, the one and only, supplier substitute. Therefore, Cameron could seek the indirect losses, which are loss profits in this case. Cameron’s total loss profits are: $750 / day X 4 days = $3,000.

A. There was a contract between Cameron and Janice

B. There was a breach of contract

C. Cameron could recover a total damages of $4,500 from Janice.

One potential issue when launching new businesses in the entertainment industry is ensuring contracts with different entities such as manufacturers, suppliers, designers, and construction builders are valid and enforceable. From a legal standpoint, an enforceable contract is present when it is: expressed by a valid offer and acceptance, has adequate consideration, mutual assent, capacity, and legality.^[1] If a party fails to conform to part or all terms of the contract, a breach occurred. When there is a breach of contract, the breached party can seek compensatory damages, which are direct harms from the breach. In addition, the breached party can seek consequential damages, which are indirect harms that are foreseeable by the breaching party.^[2] In order to seek consequential damages, a party who has suffered physical injury, property damage, or financial loss needs to perform a duty to mitigate damages, which means that the he/she has an obligation to reduce or minimize the effect and any losses resulting from the injury^[3].

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