Contracts Analysis Case Study
Marshall Petersen and his wife, Gloria, began visiting the Sunday school class you teach in Huntsville, Alabama, about six months ago. Marshall is not a Christian, but with the encouragement of his wife, who is a believer, he says he is beginning to explore the faith.
After his first visit to the class, you spent some time talking with Marshall and you discovered that he owns a small, local health food products business, and that he is interested in growing the business by adding some new product lines. You informed him of the high antioxidant qualities of the Muscadine grapes your family’s produce company sells, and you asked him if he might be interested in promoting either the grapes themselves or the various products developed using their seeds. Marshall was interested, and a few days later you supplied him with some samples. The samples turned out to be a very popular item with his regular customers, so he placed a modest phone order with your company. Over time, Marshall placed regular, increasing phone orders, and he began investing heavily in advertising for the Muscadine products at his store. Your company has faithfully delivered everything requested, promptly, and at consistent prices. You typically sent an invoice with each delivery, requiring payment within 30 days, and though Marshall has frequently been late making payment, he has generally paid each invoice within 45 to 60 days. You have elected not to charge him any interest or penalties, though your invoices state that you reserve the right to do so.
On one occasion when your son, a part-time deliveryman for your company, delivered some product to Marshall’s store, Marshall handed your son a requirements contract and asked him to sign it on behalf of your company. The contract includes a guaranteed price schedule consistent with what he had been paying. Marshall told him that it was “just a formality” to guarantee a continuing business relationship. Your son...