Assignment task: Parthenon Bookstore orders 500 copies of the book Charlotte's Web from Definite Distribution at a price of $2 each (for a total order cost of $1000) for delivery by May 15. The shipping container containing the books sinks on the journey to the United States. On April 20, Definite Distribution notifies Parthenon Bookstore that due to the sinking and other supply chain issues, it will not be able to deliver any of the books. This incident has a couple of consequences:
Consequence I: Parthenon is able to find another supplier that can deliver 500 copies of Charlotte's Web. But, Parthenon has to pay this other supplier $5 per book (for a total order cost of $2500), and the books will not be delivered until June 15.
Consequence II: Parthenon had formed a contract to resell all 500 copies of Charlotte's Web to Summer Fun Camp to distribute to campers as a reading project. Summer Fun Camp was going to pay Parthenon $6 a book. But, since Summer Fun Camp started on June 1 and needed the books before camp began, Parthenon lost the sale to Summer Fun Camp. Parthenon has not been able to find another buyer for the books, since most school programs have already ordered their summer reading books.
Parthenon decides to sue Definite Distribution for breach of contract and is trying to decide what it should ask for in damages.
This discussion question uses the scenario above and has five parts. To receive full credit, you must answer all parts, explaining your reasoning.
Part 1) If Parthenon asks for compensatory damages, would they be related to Consequence I, Consequence II, or both? Why?
Part 2) How much should Parthenon ask for in compensatory damages, and why?
Part 3) If Parthenon asks for consequential damages, would they be related to Consequence I, Consequence II, or both? Why?
Part 4) How much should Parthenon ask for in consequential damages, and why?
Part 5) If Definite Distribution wants to avoid paying consequential damages, what argument should Definite Distribution make?