UWI-OPEN CAMPUS -MGMT2021 - Business Law

Ross Enterprises have a contract with Big Steel Company Limited in respect of Information Technology (IT) Services. The contract was signed on January 1st2020 and will be effected on the April 1st2020.

In mid-February 2020 Big Steel's sales plummeted due to the Covid 19 pandemic. In addition, an already high long term debt, and operating cost, as well as Big Steel's current negative cash flows situation placed the company in serious financial peril. Indeed, if they cannot find a resolution soon to deal with their cash flow problems and debt, they will have to close operations permanently and send all employees home.

Upon hearing this pronouncement, the Trade Union representing workers at Big Steel advised management that they will take strike action. This further affected the operations of Big Steel and resulted in a loss of production, sales and the much-needed cash flows, which is critical to pay off their debts and meet current fixed operating cost. On March 3rd2020, Big Steel Company Limited filed for bankruptcy and sent all employees home.

On the March 4th2020, Big Steel wrote Ross Enterprises advising of their circumstances and the virtual impossibility of implementing the signed contact for IT Services, which was scheduled to commence on April 1st2020.

Ross Enterprises is adamant that they have a binding arrangement and wanted to proceed as per signed contract. However, Big Steel advised Ross that certain events, such as, Covid 19, Global Recession and a subsequent strike has culminated for which the company has little or no control of. Thus, it was impossible to implement the contract on the agreed start date due to these circumstances.

Advise Ross Enterprises on this matter. UsedtheIRACMethod.