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BUSA 690 (31)
Lecture 19

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Business Admin
BUSA 690
Peter Younkin

- On August 1, Brian contractually agreed to purchase a diamond from Mila for $100 000. On that date, Brian pre-paid half of the purchase price and promised to pay the other half upon delivery. Mila promised to deliver the diamond to Brian on October 1. The diamond has a unique size and shape. In anticipation of receiving it, Brian spent $25 000 on a custom-made ring that could accommodate the diamond. On September 1, political revolutions in several diamond producing countries disrupted the flow of diamonds. The diamond that was the subject of Brian and Mila’s contract consequently increased in value to $150 000. Mila therefore refused to deliver the diamond to Brian. Brian is entitled to receive  reliance damages of no more than $75 000 - On March 1, Joe contractually agreed to purchase an antique family heirloom from his third cousin, Maureen, for $40 000. Joe paid half of that price immediately and promised to pay the other half upon delivery. Maureen promised to deliver the heirloom on May 1. On April 1, another member of the family discovered that the heirloom had not belonged to a famous ancestor, as everyone had believed, but rather to that person’s half-brother. The market value of the heirloom consequently dropped to $10 000. Maureen nevertheless refuses to deliver it as promised. Joe is entitled to  none of the above - Munchable Catering Company contractually agreed to cater Indira’s wedding for a price of $25 000. Because Indira was anxious for everything to go just right on her wedding day, she insisted that the agreement contain a clause that said that, if Munchable breached the contract, it would be required to pay damages of $250 000. Tarik, the owner-operator of Munchables, agreed to the insertion of that clause because he was (i) new to the business, (ii) very confident that he would perform exac
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