GROUP 9CASE 7 - CHAPTER 9

Group member-Ngo Van Linh-Le Vu Thuy Linh-Vu Ha Linh-Vu Thanh Loan

CASE STUDY

• Borden, Inc.- the purchaser

• Sons of Thunder’s (SOT)- the seller

They had the contract of purchasing the clam for five years

The contract allowed each parties to cancel the contract by giving the prior notice in

writing 90 days before the effective date of cancellation

ISSUE Borden - Did not take all the

goods as they required most of weeks

- New manager refused to purchase from SOT

- Charged SOT for the shucking equipment

- Cancelled the contract after 90 days

SOT

- Sold the clam for other suppliers

Sued Borden for breach of contract and alleged; breach its covenant of good faith and fair dealing

QUESTION

Was Borden’s cancellation in bad faith, therefore, in breach of the duty

of good faith and fair dealing?

TERM- UCC – the Uniform Commercial Code is the

main body of law that governs transactions involving goods.

- The UCC governs the sale of tangible, movable goods, property leases such as business equipment, and financial transactions such as bank deposits and letters of credit.

- Good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing.

TERM• This includes the requirement that neither party shall do

anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract

• This obligation is included in contracts that contain express and unambiguous provision permitting either party to terminate the contract without cause. 

PRECEDENTCase: Wood vs. Lucy, Lady Duff-Gordon in 1917

Plaintiff: Wood- top New York advertising agent, representing major commercial clients as well as celebritiesDefender: Duff Gordon- a fashion designerAppeal: - Trial court

- Appellate court - Supreme court

Precedent• Duff signed a contract to give Wood the exclusive

right to market garments and other products bearing her endorsement in one year

• Under contract, if Wood did no work to market the clothes, no monies could be received and no patents would become necessary.

• Lucy broke the contract by endorsing products sold by Sears Roebuck without Wood’s knowledge => Wood sued

• Lucy gave the reason that Wood was not actually required to do any thing, so the agreement was not valid

PRECEDENT• Trial court found for Wood, Duff appealed• Appellate court reversed and Wood appealed• NY Supreme court reversed the reversal and

reinstate the Trial court’s decision Wood won the case and Duff appealed

for breach the its covenant in good faith and fair dealing.

NEW LAW• Determine that a promise to represent the

interests of a party constituted sufficient consideration to require the enforcement of a contract base on that promise.

• A promise may be lacking, and yet the whole writing may be” instinct with an obligation” imperfectly expressed.

• The doctrine of consideration should not be used to dismiss what are obviously commercial contracts. The requirement of reasonable effort can always be read into a business contract as an implied consideration.

CONCLUSION

Borden was not honest in fact as required by the U.C.C.

and that it acted in bad faith.

 

IMPLICATION IN VIETNAM

Case: tranh chap in contract

•The plaintiff: Soi Dat Company (SD company)

•The defender: Dong Do Thanh Company (DDT company)

•Court : HCM people court

EVENT• There was a contract between two companies to

deliver a new Matiz Se 5 seats, silver color, manufacturing in 2006 in Vietnam in value of 13.000 USD

• But when DDT company delivered the car, it was not like in the contract. The car was manufacted in 2005 and even its quality was bad.

• SD company cancelled the contract and asked DDT Company to refund but DDT company refused.

SD sued DDT in bad faith and fair dealing and forced them to recover all the damage.

VERDICT• SD did correctly in cancelling the contract• DDT did not do the obligation in good faith

and fair dealing The car was not like in the contract When the contract was cancelled correctly,

they did do their obligation to refund

DDT had to pay back all the money, which SD gave, and recover all the damage in total of 228.639.000 VND

Thank you for listening