Question 3: The Daily Crumb is a bakery in Auckland. On July 31 they entered a contract with Proud Mills for the supply of flour. By the said contract, Proud Mills are required to supply 20 bags of flour to Daily Crumb before August 16. On August 10, the manager of Proud Mills gave a call to the Daily Crumb to explain to them that they would not be able to supply the flour as promised but that they are happy to advise the Daily Crumb on how to get good flour from other suppliers. The Management of the Daily Crumb responded with an email, demanding the agreed number of flour bags must be supplied by August 16. However, as Proud Mills refused to reply the said email by August 15, Daily Crumb had to order bags of flour from Delicious Grains. Daily Grains agreed to sell at a price which was 20% higher than what Proud Mills had agreed. Also, Daily Crumb was only able to get ten bags of flour instead of 20 bags as desired. Further, they claim that the quality of the flour bought from Delicious Grains was significantly lower than that which Proud Mills had agreed to sell. They have decided to sue Proud Mills for the following heads of losses: 1) The 20% additional cost paid for ten bags of flour; 2) Their inability to serve all their customers for the last two weeks of August due to the shortage of flour, which has cost them $20,000 in lost revenue; and 3) Future loss of revenue due to a reduction in customers and customer loyalty since their production reduced for two weeks in August.