Consideration of the Contract Flaw – Giant v Little

You are the Chief Financial Officer of the Giant Candy Company (Giant). Giant has been operating at a loss. Giant believes it must cut costs. Your boss decides to review all of the company’s contracts to determine if there are any contracts that can be terminated. You find the following contract written by Little Candy Company:

“Giant Candy Company (Giant) agrees to buy and Little Candy Company (Little) agrees to sell all of the candy coating that Giant requires for a period of five years. The candy coating shall be purchased at the current list price as determined by Little. Orders will be shipped ten days from the placement of order. Applicable taxes extra. Contingencies beyond the control of Little to be sufficient excuse for failure to comply with the contract.

 

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