Case Analysis of Contracts between parties

“McKay operated a large farm on which he grew a variety of vegetables for commercial canners. He also grew a smaller quantity for sale to local retailers and wholesalers as fresh produce. On August 5th, Susan Daigle of Daigle Wholesale Foods Ltd. Approached McKay and offered to purchase 5,000 5-kilogram bags of carrots from him at a fixed price per bag. McKay stated that the price was acceptable to him, but he was uncertain as to whether his crop would be sufficient to make up the 5,000 bags. He told Daigle he could definitely supply 4,000 bags, and that he would be in a position to tell Daigle Wholesale Foods Ltd. By the next week if the additional 1,000 bags would be available. Daigle nodded approval and left.

“A few days later, McKay discovered that crop failures in other parts of the province had pushed carrot prices substantially above the price offered by Daigle Wholesale Foods Ltd. McKay’s crop, however, was abundant, and he discovered that he had 6,000 bags when the crop was harvested.

“At the end of the week, Susan Daigle called to determine if McKay could supply her with 5,000 bags, or only 4,000. McKay refused to supply Daigle Wholesale Foods Ltd. With any carrots, and informed her that it was his intention to sell the crop elsewhere.

“Discuss the negotiations between the parties, and determine the rights (if any) and liabilities (if any) of the parties. Assume that Daigle Wholesale Foods Ltd. Brought an action against McKay.

“Discuss the nature of the action and render, with reasons, a decision.”

Written Assignment 1: McKay and Daigle’s Carrots
Group 8: Francesca Sivilotti, Zianne Khalifa, Omar Al-Sourani
B00829332, B00859725, B00810827
MGMT 2200: Legal Environment of Management
Professor R. Klapstein
October 11, 2022
This paper represents our own work in accordance with the regulations of Dalhousie University. Signed
electronically by Zianne Khalifa, Francesca Sivilotti, and Omar Al-Sourani on October 11th, 2022.
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A contract is a free, voluntary, binding promise that creates a set of rights and obligations
between parties and offers legal remedy in the event of a breach (Klapstein, Module 4 Part 1).
The elements of a contract are (1) offer, (2) acceptance, (3) consideration, and (4) intention. If
Daigle and McKay’s actions meet these elements, McKay can be held liable for his end of the
contract with Daigle. It is clear that Daigle approaching McKay and making an offer to purchase
a specific amount (5000 bags) of carrots from him for a specific price per bag constitutes an
offer. Specifically, Daigle made a bilateral promise as she communicated to him that she was
prepared to pay him an amount of money if he promised to perform the sale (sell her 5000 bags
of carrots).
The first legal issue of this case is whether McKay’s actions constitute acceptance of
Daigle’s offer. McKay did not accept Daigle’s original offer as he communicated to Daigle that
he could not guarantee he would produce 5000 bags’ worth of carrots to sell. In doing so he was
truthful and did not commit the tort of deceit, which would involve making a false statement
knowing it was false.
The second issue is whether McKay’s response to Daigle constitutes a counter-offer. For
a counter-offer to be legally binding these must be another offer made by the seller and an
acceptance from the buyer. McKay’s response constitutes a counter-offer for 4000 bags of
carrots, which he said he could “definitely supply” (Willes, Contemporary Canadian Business
Law, p. 155), but we determine that the additional 1000 bags are not part of his counter-offer. He
never indicated to Daigle that he would sell them to her were they to be available, only that he
was unable to know at present whether or not they would be available. A reasonable person
would not infer that he intended to give Daigle an enforceable right to the additional 1000 bags.
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Rather, he merely left open the possibility for a future contract to be negotiated when he
determined the quantity of carrots he could sell. Thus, the terms of the counter-offer only include
the 4000 bags of carrots for the specified price. Daigle accepted this contract by nodding her
head, a common sign of agreement. As acceptance can be implied from the parties’ conduct, a
head nod can constitute a legal form of acceptance (Sale of Goods Act, s. 6).
Consideration that goes in both directions is clearly present. Daigle promised to
compensate McKay the agreed-upon price per bag if McKay provided the carrots as
consideration (money for carrots). The court does not weigh in on whether the values of each
side’s consideration are equivalent as long as consideration for both sides is present, which it is.
But the third issue is whether Daigle and McKay intended to enter a legally enforceable
contract that they will be held to and to which they can hold each other accountable. We
determine McKay and Daigle did intend to enter into a legal contract as they had previously
offered and accepted, respectively, a counter-offer for 4000 bags of carrots. Since the parties
agreed to exchange 4000 bags of carrots for money, the parties intentionally formed a legally
binding contract on these terms. The evidence suggests that a meeting-of-minds took place
between the parties, knowing that this meeting was creating legal rights and obligations, and a
reasonable person would conclude from the evidence that creating such rights and obligations
was their intention in discussing a business transaction.
The fourth issue is whether this contract is enforceable, or whether it is illegal or void for
any reason. We determine the contract is enforceable. It is neither nor illegal nor does it serve an
illegal purpose. It is not missing any of the elements of a contract, as explained above. McKay
and Daigle’s words and actions would have led a reasonable person to think each party intended
to follow through with the agreement. There was no duress or coercion. The parol evidence rule
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doesn’t apply because there was no sort of written document. Thus, Daigle will be able to have
the contract enforced in a court of law.
Daigle might attempt to sue McKay for the tort of deceit on the grounds that he had the
intention to deceive her with his counter-offer; after all, he led her to rely on his alleged intention
to sell her 4000 bags of carrots, and later stated that his intention was to sell those carrots to
somebody else (Klapstein, Module 3 Part 1). She may well have suffered losses from reliance on
this contract. However, we do not find that McKay can reasonably be said to have intended to
deceive Daigle. It is more reasonable to conclude that his intentions simply changed. What
matters is that, at the time of the contract, his intentions were clearly to sell Daigle those carrots.
Thus, while he is liable for this sale, he is not liable for deceit.
As a final consideration, section 7(1)(2) of the act for codifying the law relating to the
sale of goods in NS states that any contract of sale above the value of $40 must be bound by a
payment, the acceptance of part of the good, or a note or memorandum note in writing with a
signature of the party being charged, including for goods intended to be sold in the future (Sale
of Goods Act, s. 1). But as we do not know the value of the sale, we cannot conclude that this law
applies in McKay and Daigle’s case.
Thus, we determine that Daigle has a right to 4000 bags of carrots and is liable for the
agreed-upon price for each of those bags, and that McKay has a right to that amount of money
and is liable for 4000 bags of carrots.
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References
Klapstein, R. (2022). MGMT 2200 Module 4: Contract Law. Video lecture 1: The Elements of a
Contract.
Klapstein, R. (2022). MGMT 2200 Module 3: Tort Law Part 1. Video lecture 1: Intentional
Torts.
Sale of Goods Act. R.S., c. 408, s. 1 and s. 6.
Willes, J. A., & Willes, J. H. (2020). “Contemporary Canadian Business Law, Principles and
Cases,” 12th edition. McGraw-Hill Ryerson, p. 155-156.
Your written group case analysis should be not more than 3 or 4 pages long (12 point font, double-spaced). The written
assignments must be submitted on-line by 11:00PM on the due date. Every effort will be made to have the assignments graded
and returned to students within a week of the due date. Unless arrangements are made with the instructor in advance, late
assignments will not be accepted.
The evaluation of a group’s performance on the written case assignments will reflect the Module 3 Part 1 video titled “How
to analyse a case.”
FULL TEXT OF ASSIGNED CASE:
“McKay operated a large farm on which he grew a variety of vegetables for commercial canners. He also grew
a smaller quantity for sale to local retailers and wholesalers as fresh produce. On August 5th, Susan Daigle of
Daigle Wholesale Foods Ltd. Approached McKay and offered to purchase 5,000 5-kilogram bags of carrots
from him at a fixed price per bag. McKay stated that the price was acceptable to him, but he was uncertain as
to whether his crop would be sufficient to make up the 5,000 bags. He told Daigle he could definitely supply
4,000 bags, and that he would be in a position to tell Daigle Wholesale Foods Ltd. By the next week if the
additional 1,000 bags would be available. Daigle nodded approval and left.
“A few days later, McKay discovered that crop failures in other parts of the province had pushed carrot prices
substantially above the price offered by Daigle Wholesale Foods Ltd. McKay’s crop, however, was abundant,
and he discovered that he had 6,000 bags when the crop was harvested.
“At the end of the week, Susan Daigle called to determine if McKay could supply her with 5,000 bags, or only
4,000. McKay refused to supply Daigle Wholesale Foods Ltd. With any carrots, and informed her that it was
his intention to sell the crop elsewhere.
“Discuss the negotiations between the parties, and determine the rights (if any) and liabilities (if any) of the
parties. Assume that Daigle Wholesale Foods Ltd. Brought an action against McKay.
“Discuss the nature of the action and render, with reasons, a decision.”
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