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Phantzy Pantz is a women's fashion store. In January 2020, Pilkey, the purchasing agent for Phantzy Pantz heard about the possibility of a global coronavirus

Phantzy Pantz is a women's fashion store. In January 2020, Pilkey, the purchasing agent for Phantzy Pantz heard about the possibility of a global coronavirus pandemic. Seeing a unique business opportunity, he placed an order for high-fashion protective face masks from Lorenzo's of Milan, an Italian fashion wholesaler. Pilkey agreed to buy 10 000 protective face masks at $5 each, intending to sell the items at a cost of $25 each, thus earning a profit of $200 000. Pilkey was concerned, however, because he knew that Lorenzo's was experiencing labor difficulties: the unions of Milan were threatening a strike, and Phantzy Pantz's order might not be completed on time. Pilkey therefore convinced Lorenzo's to include the following clause into their contract:

Lorenzo's of Milan promises to deliver 10 000 high-fashion protective face masks to Phantzy Pantz by March 1. If, for whatever reason, Lorenzo's is unable to meet the delivery deadline, it will pay $20 for each face mask that it fails to deliver.

As the pandemic spread much faster than anyone had anticipated, the market value for high-fashion protective face masks suddenly shot up, hitting $50 per item. Phantzy Pantz was about to make a huge profit of $450 000. Unfortunately, the pandemic hit Italy particularly hard, and Lorenzo's had to shut down its production facilities in order to meet the government requirement of social distancing. To make matters worse, Phantzy Pantz was unable to mitigate their supply problem because no alternative vendors could be found.

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