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In discussions with the sales representative for Chicken Country Farms (CCF), Esther agreed to

purchase 12,000 eggs provided they were freshly laid and would be delivered on the morning of

April 1. The sales representative said the price would be approximately $5,000.00 but she would

see if CCF would give a better price. Esther thought this was reasonable since the going retail rate

for farm fresh eggs was $6.50 per dozen.

On March 2 Esther signed the following contract that was prepared by CCF.

CCF agrees to sell and Esther Buney agrees to purchase up to 12,000 eggs at a price of

$5.00 per unit to be delivered on April 1. CCFs maximum liability for failure to deliver

shall be limited to $1.00/unit to a maximum of $500.00.

Esther had planned to hard boil and paint the eggs as soon as they were delivered and had entered

into contracts to sell the 12,000 painted eggs to local retailers for $10.00/dozen. It was a required

term of those agreements that the eggs be painted and delivered to the retailers on the morning of

April 4 so they could be sold prior to Easter.

On April 1, CCF emailed Esther and advised that the delivery would be one day late because of

mechanical difficulties with their delivery van but they were loaded and would be delivered by

9:00 a.m.

The delivery from CCF arrived on April 2 at 9:00 a.m. Esther expressed disappointment with the

late delivery and said she was uncertain whether she would be able to meet her commitments to

paint and deliver the eggs. The driver said it wasnt his issue and he could take the eggs back if she

was refusing delivery. Feeling she had no choice, Esther told him to leave the eggs and signed the

bill of lading that acknowledged receipt and contained a promise to pay the full purchase price

within 7 days.

Esther did not take time to inspect the eggs upon delivery. Later that morning upon removing the

eggs from the cartons (the eggs were packed in cartons of 100) she discovered that there were only

11,300 eggs in total and that 350 of the eggs were cracked and 500 were medium in size which

she would not be able to sell to her retailers. In response to her inquiries, CCF advised that (i) the

11,300 eggs were all that their hens had laid, (ii) there was no size stipulation in the contract, (iii)

Esther had every opportunity to inspect the eggs and had signed the bill of lading and (iv) the eggs

were all perfect when they left the farm.

Esther then contacted a number of other farms and discovered that she could obtain eggs elsewhere 2

for immediate delivery at $3.00 per dozen. If they were delivered that evening (April 2) she could

arrange for additional labour at a cost of $500.00 to meet her delivery deadline of April 4 for her

retailers.

Esther calls you on April 2 at 2:00 p.m. with the following questions and requests an immediate

analysis and response:

(iii)

Since Esther did not inspect the eggs at the time of delivery does the principle of Caveat

Emptor apply?

(iv)

What remedies, if any, does Esther have against CCF? Does the principle of mitigation

apply? If Esther is unable to meet the deadline for delivery to her retailers and is then sued

by her retailers for their lost profits can this be included in her claim?

Required: Provide a legal analysis of the issues raised by Esther. Be certain to explain the

applicable legal principles and how they apply to the facts as part of your analysis.