Val's Foods signs a contract to buy 1,500 pounds of basil from Sun Farms, a small organic herb grower, if an independent organization inspects the crop and certifies that it contains no pesticide or herbicide residue.Val's has a contract with several restaurant chains to supply pesto and intends to use Sun Farm's basil in the pesto to fulfill these contracts.When Sun Farms attempts to purchase additional basil, an unexpected hailstorm destroys half the crop.Sun Farm's attempts to purchase additional basil from other farms, but it is late in the season, and the price is twice the normal market price.Sun Farms is too small to absorb this cost and immediately notifies Val's that it will not fulfill the contract.Using the information presented in this chapter, answer the following questions.

(a) Suppose that Sun Farms supplies the basil that survived the storm but the basil does not pass the chemical-residue inspection.Which concept discussed in the chapter might allow Val's to refuse to perform the contract in this situation?

(b) Under which legal theory or theories might Sun Farms claim that its obligation under the contract has been discharged by operation of law?Discuss fully.

(c) Suppose that Sun Farms' contacts every basil grower in the country and buys the last remaining chemical-free basil anywhere.Nevertheless, Sun Farms is able to only ship 1,475 pounds to Val's.Would this fulfill Sun Farm's obligations to Val's?Why or why not?

(d) Now, suppose that Sun Farms sells it operations to Happy Valley Farms.As part of the sale, all three parties agree that Happy Valley will provide the basil as stated in the original contract.What is this type of agreement called?

The concepts from the Chapter:

Legal remedies or money damages include:

• Compensatory damages: Damages designed to put the plaintiff in the position he or she would have been in had the contract been fully performed.
• Nominal damages: Token damages that merely recognize that the plaintiff had been wronged.
• Punitive damages: Damages designed to punish the defendant.
• Liquidated damages: Damages specified in advance in the contract.

Equitable remedies, which are granted only when legal remedies are inadequate, include:

• Recission and restitution: The termination of the contract and the return of the parties to their precontract status.
• Specific performance: an order requiring the defendant to perform some act.
• Injunction: An order prohibiting the defendant from performing some act