B) Wallies Limited Wallies Limited (‘Wallies’) is a public company which operates a supermarket business in Brisbane, specialising in organic, high…

B) Wallies Limited

Wallies Limited (‘Wallies’) is a public company which operates a supermarket business in

Brisbane, specialising in organic, high quality fresh fruit and vegetables. Wallies is considering

opening a new store in Sydney (it owns a building which it can convert to a store). First, Wallies

needs to ensure that it can obtain quality produce (organic fruit and vegetables) from a reliable

supplier. Wallies started negotiating with the only suitable local supplier, Sydney Farm Produce

Pty Ltd (‘SFP’) for a contract to supply Wallies with the produce it needs for the supermarket (the

amounts to be supplied will vary month-by-month).

At a face-to-face meeting, Wallies’ CEO (Michael Keen) tells SFP’s Managing Director (Jenny

Collins) that Wallies cannot enter into any contract to purchase furniture to set up the new store

(eg, new office furniture and shelves for the shop floor, etc) until it can first sign a contract with

SFP for the supply of the produce for its new supermarket. Collins (SFP) said that she understood

this, and she was also keen to finalise the negotiations and sign a final, binding contract. Three

days later the key terms of the Wallies-SFP contract are almost complete after the parties have

exchanged draft contracts and discussed (by correspondence) minor amendments to the contract

document. In all correspondence, SFP has always made it clear that “there is no final binding

contract between Wallies and SAFP until there is signed, final, written agreement.” There is just

one final matter to negotiate, which is the amount of fruit SFP will agree to supply over the

Christmas period. Collins (SFP) calls up Keen (Wallies) and tells him “I just don’t want to agree

to anything which I can’t later perform.” Keen tells Collins that if Wallies cannot order furniture

and start setting up the new store soon, there will be a costly delay. Collins says to Keen: “OK,

just go ahead and buy your furniture, it will all be sweet. In the next few days my people will be

able to tell me exactly how much fruit we can supply over Christmas, we can put that in the

contract and sign it. It will happen for sure.”

Wallies then signs a contract with a furniture supplier for the urgent manufacture and supply of

$250,000 worth of furniture. About one week later, Keen (Wallies) calls Collins (SFP) again to

find out when the supply contract will be signed. Collins tells Keen that she found out that Culls

Supermarkets – a competitor of Wallies – will pay a higher price for all of the produce which SFP

can supply, and so SFP has decided to sign a supply contract with Culls instead. Keen gets angry,

but Collins reminds Keen that there was no final contract signed between SAFP and Wallies.

Collins says: “I am sorry but that’s the legal situation and nothing can change it.” Wallies then

tells the furniture supplier to cancel the order for the furniture – the furniture supplier is now angry

because it has bought a lot of materials for the job and already has completed half the ordered

furniture, ready for delivery. The furniture supplier says that it may get its lawyers involved if

Wallies will not pay for the furniture it has ordered.

Advise Wallies on its legal rights, obligations and remedies in respect of (i) the furniture supplier

and (ii) SFP.B) Wallies Limited

Wallies Limited (‘Wallies’) is a public company which operates a supermarket business in

Brisbane, specialising in organic, high quality fresh fruit and vegetables. Wallies is considering

opening a new store in Sydney (it owns a building which it can convert to a store). First, Wallies

needs to ensure that it can obtain quality produce (organic fruit and vegetables) from a reliable

supplier. Wallies started negotiating with the only suitable local supplier, Sydney Farm Produce

Pty Ltd (‘SFP’) for a contract to supply Wallies with the produce it needs for the supermarket (the

amounts to be supplied will vary month-by-month).

At a face-to-face meeting, Wallies’ CEO (Michael Keen) tells SFP’s Managing Director (Jenny

Collins) that Wallies cannot enter into any contract to purchase furniture to set up the new store

(eg, new office furniture and shelves for the shop floor, etc) until it can first sign a contract with

SFP for the supply of the produce for its new supermarket. Collins (SFP) said that she understood

this, and she was also keen to finalise the negotiations and sign a final, binding contract. Three

days later the key terms of the Wallies-SFP contract are almost complete after the parties have

exchanged draft contracts and discussed (by correspondence) minor amendments to the contract

document. In all correspondence, SFP has always made it clear that “there is no final binding

contract between Wallies and SAFP until there is signed, final, written agreement.” There is just

one final matter to negotiate, which is the amount of fruit SFP will agree to supply over the

Christmas period. Collins (SFP) calls up Keen (Wallies) and tells him “I just don’t want to agree

to anything which I can’t later perform.” Keen tells Collins that if Wallies cannot order furniture

and start setting up the new store soon, there will be a costly delay. Collins says to Keen: “OK,

just go ahead and buy your furniture, it will all be sweet. In the next few days my people will be

able to tell me exactly how much fruit we can supply over Christmas, we can put that in the

contract and sign it. It will happen for sure.”

Wallies then signs a contract with a furniture supplier for the urgent manufacture and supply of

$250,000 worth of furniture. About one week later, Keen (Wallies) calls Collins (SFP) again to

find out when the supply contract will be signed. Collins tells Keen that she found out that Culls

Supermarkets – a competitor of Wallies – will pay a higher price for all of the produce which SFP

can supply, and so SFP has decided to sign a supply contract with Culls instead. Keen gets angry,

but Collins reminds Keen that there was no final contract signed between SAFP and Wallies.

Collins says: “I am sorry but that’s the legal situation and nothing can change it.” Wallies then

tells the furniture supplier to cancel the order for the furniture – the furniture supplier is now angry

because it has bought a lot of materials for the job and already has completed half the ordered

furniture, ready for delivery. The furniture supplier says that it may get its lawyers involved if

Wallies will not pay for the furniture it has ordered.

Advise Wallies on its legal rights, obligations and remedies in respect of (i) the furniture supplier

and (ii) SFP.

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