On August 5th, George from Phil’s Trading Co. in Park Slope, NY called Harry’s Printers in Ithaca, NY to ask about pricing and delivery for an 2,500 black t-shirts with the phrase “P.S. I Love You” emblazoned on the front and “Park Slope New York” written on the back. Phil’s has sold these shirts before and found them popular, but only among Park Slope residents. Harry says he can print and deliver then to Phil’s for $5.00 per shirt, payable 60 days after delivery.
On August 6th, George sends Harry a purchase order for the 2,500 t-shirts which states “Price – $5.00 per shirt. Delivery – FOB Acme Supply House., Park Slope, NY. Payment – 60 days following delivery.
On August 8th Harry’s sends George a document labeled Confirmation of Order” that said, in relevant part, “this confirms your order for 2,500 Shirts at a price of $5.00, FOB Harry’s Printers, Ithaca, NY”
On August 25, Harry’s ships the 2,500 t-shirts to Phil’s designated supply house and sends Phil’s an invoice for $13,200, including shipping costs of $700. The shipping voucher states all charges are payable within 60 days from date of receipt of goods.
On August 31, Harry hears through the grapevine that Phil’s Trading is having serious money problems. A friend tells Harry that Phil’s was three week’s behind on a $50,000 account with his firm and the friend had heard they were 4 week’s behind on a $20,000 account with another supplier.
Harry calls George and asks if what he heard was true. George confirms it, but tells Harry it is just a short term cash flow problem and it will have no effect on Harry getting paid by the end of the 60 days. Not feeling any calmer, Harry tells George that he want’s a certified check for the full amount in 72 hours or he is sending “some guys to Park Slope to pick up ‘My’ shirts.”
Phil’s did not make any payment by the 72 hour deadline and on September 5th Harry sent three large employees to Acme Supply House who, not wanting any problems, turned the shirts over to them. The employees brought the t-shirts back to Harry’s. Acme sent Phil’s a bill for $300 for the time its workers spent on the issue.
On September 15th, Harry’s sold 1,000 of the shirt’s to Evelyn’s Gift Shop in Park Slope, a major competitor of Phil’s, for $4.00 per shirt, FOB Ithaca, NY. On September 29th, Harry’s sold another 1,000 shirts to Evelyn’s, FOB Ithaca, NY. The last 500 shirts are still in Harry’s warehouse.
As it turns out, George was right. Phil’s cash flow problems were temporary and by October 1, all of Phil’s back bills were paid off, and Phil’s could have paid Harry’s as well. Phil’s sues Harry’s for breach of contract and Harry’s counterclaims alleging breach of contract also. Analyze the claims and defenses of the parties. Please analyze the parties positions and possible damage claims.
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