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Verity Fashion is a clothing manufacturer and has an order to create 10,000 pairs of flipflops for a retailer for the summer. The order was placed over the phone in February. The order has been completed and has been boxed up ready for delivery. The retailer calls Verity Fashion in June and says that the order is no longer required. What action can Verity Fashion take?
Suggested Answer: A
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Verity can sue for damages. The order was placed over the phone meaning that there was a verbal contract in place. Contracts do not need to be written to be enforceable so option 2 is incorrect. There is no termination clause mentioned in the question so you can assume that there isn't one. This means that the retailer is committing a breach of the verbal contract by cancelling the order. Verity could therefore apply for damages. (Whether or not they'd be awarded is a different matter!). This question tests your understanding of when contracts can be terminated and remedies for breaches. See p. 134.
33 comments · newest first
FR
Frank
10 months ago
Wow, I didn't know verbal orders could be so risky!
CY
Cyndy
11 months ago
Nothing they can do without a contract, it's a bummer.
LU
Lucy
11 months ago
I think subcontracting could be a smart move.
EA
Earnestine
11 months ago
But there's no written contract, right? So can they even do that?
PE
Pedro
11 months ago
They should definitely sue for damages! That's a lot of flip flops.
RY
Ryann
11 months ago
Claiming on insurance seems like a long shot, but if they have coverage for lost orders, maybe option D could be valid? I'm not confident about that one.
TR
Tricia
12 months ago
I practiced a similar question where a retailer canceled an order, and I think subcontracting could be a way to mitigate losses, so option C could work too.
DA
Dawne
12 months ago
I think they might be able to sue for damages, but I'm not entirely sure if that applies without a formal contract. Option A sounds plausible.
FR
Frederic
1 year ago
I remember discussing how verbal agreements can be tricky, so I'm leaning towards option B since there's no written contract.
AL
Alberta
1 year ago
This seems straightforward to me. Since the order was placed over the phone, there's likely no written contract, so option B is the correct answer.
BR
Brandon
1 year ago
I think option A is the way to go here. The company has already incurred the costs of manufacturing the flip-flops, so they should be able to sue for damages since the order was canceled.
VI
Viva
1 year ago
I'm a bit confused on this one. Is there any information about a written contract? That could make a difference in the options available.
PI
Pilar
1 year ago
Okay, let's see. The key facts seem to be that the order was placed over the phone and the flip-flops have already been manufactured. I'm leaning towards option A, but I'll double-check the details.
AU
Audry
1 year ago
Hmm, this seems like a tricky one. I'll need to carefully consider the details about the order and the contract to determine the best course of action.
VI
Viola
1 year ago
Wait, they made 10,000 pairs of flip-flops in February? Clearly, they were banking on a hot summer. Looks like Mother Nature had other plans.
TA
Tamra
1 year ago
C) subcontract the manufacturing of the flipflops to a third party
KA
Kate
1 year ago
B) nothing- there is no written contract in place
DE
Delsie
1 year ago
A) sue for damages as the flip flops have already been made and this incurred costs
IZ
Izetta
1 year ago
Claiming on insurance? Genius! Why didn't I think of that? It's the perfect way to recoup their losses and avoid a messy lawsuit.
TA
Tatum
1 year ago
C) subcontract the manufacturing of the flipflops to a third party
LA
Lashon
1 year ago
B) nothing- there is no written contract in place
JE
Jenelle
1 year ago
A) sue for damages as the flip flops have already been made and this incurred costs
JA
Janet
2 years ago
They could try to subcontract the manufacturing to minimize their losses.
AM
Amie
2 years ago
Subcontracting the manufacturing? That's a bold move, Cotton. Let's see if it pays off for them.
SH
Shantell
1 year ago
C) subcontract the manufacturing of the flipflops to a third party
RI
Ria
1 year ago
B) nothing- there is no written contract in place
LU
Luisa
1 year ago
A) sue for damages as the flip flops have already been made and this incurred costs
BE
Beata
2 years ago
B? Are you kidding me? No written contract? That's a recipe for disaster. Verity Fashion should have covered their bases.
EL
Elke
2 years ago
Option A is the way to go. They incurred costs, so they should definitely sue for damages. It's the only logical choice here.
MI
Mirta
1 year ago
But what if the retailer claims there was no written contract in place?
TE
Tess
2 years ago
Yes, I agree. Verity Fashion should definitely sue for damages.
JO
Jolene
2 years ago
But there's no written contract in place, so they might not have a strong case.
SA
Salome
2 years ago
I think Verity Fashion should sue for damages.