In January a buyer agreed with a seller on to sell him 10,000 pounds of tomatoes and the delivery to be done on July 1st. It was stated that the price would be set on June 15th and that then buyer was to pay the price on delivery. On June 15th the price of tomatoes was approximately 75 cents per pound in the market. The seller set the price at $1.10 per pound. The buyer asked the seller to lower the price but the seller refused and a disagreement ensued and the buyer sued the seller questioning the seller’s right to set the price at such a high level and an action was brought to court to solve the dispute.Answer:In any sale contract there must be an obligation s for performance.
The buyer on his part has the obligation to pay for goods or services on their receipt as agreed in the contract if they meet the set standards. The seller has the obligation to make the goods available to the buyer at the set price or a reasonable price, condition, and time.It is important to note at this point that both parties to a sales contract have the obligation of good faith which means that both have to be honest in the fact and in transaction. This is critical for success of any contract because if either party to the contract fails to be honest repudiation may occur. This means that the terms of contract to be set by both the parties have to have good moral standards.
For example price fixing should be made in a reasonable manner by considering what is being offered in the market and afew other operational costs is involved in the transaction. Neither of parties should feel that the other has cheated on his/ her part and as such each ought to treat the other fairly.In a contact like the sale contract in question, there has to an offer originating from either party and there has also to an acceptance from the other. The offer should be in good faith so that the acceptance can be made in good faith.
An acceptance is usually made when the consideration is seen as beneficial to the party making the acceptance. In this case the consideration which is the price for tomatoes was meant to in future i.e. in July.By setting the price at $1.
10, the seller was not right because when the buyer went into agreement with him to sell the tomatoes in January and agreed that the seller was to set the price on June 15, it was expected that the price would be pegged on market price. This is because for the agreement to be made the seller should make a reasonable offer i.e. the price for the tomatoes should be at least what is the market price. By virtue that the consideration i.e. price was to be in future did not give the seller any due right to set an out of reach price because the buyer had agreed to buy from him. The buyer had a right to ask for reduction of the price because he / she could not buy from other sources at the market price for the buyer was tied by the contract agreement (Enderlin, F, 139).
Being tied by the contract also meant that the buyer had the right not to be exploited simply by the virtue of having agreed to buy from the said seller in the sale contract. The $1.10 price is seen as exorbitant and likely to exploit the buyer simply because he/ she had gone into the contract agreement with the seller.Further the buyer has the right to refuse to buy the goods from this seller. The buyer also can seek for damages from the seller because the latter has in way repudiated the contract by not being honest in his offer and consideration. Conclusively it can be stated tat the seller was not right in his/ her action of setting the price at $1.10 when the market price was at 75 cents simply because this is unreasonable in the prevailing circumstances.