Lynx Cars Ltd, the manufacturer of a revolutionary fuel-efficient small car, enters into a five-year dealership agreement with Roadstar Ltd, a northern-based company of car dealers, in November 2003. A clause in the agreement states: ‘This agreement is not intended to be legally binding but the parties honourably pledge that they will carry out its terms.' Roadstar Ltd places an initial order for 2,000 cars to be deliv- ered by the end of 2007, which is accepted by the manufacturer. One month after the successful launch of the car at the Motor Show, Lynx Cars Ltd writes to Roadstar Ltd informing it that, owing to production difficulties, the company estimates that it will be able to deliver only 200 cars by the end of 2007. It further states that it will be withdrawing from the dealership agreement from the end of 2007 to be able to con- centrate its resources on its south of England car dealers.
Advise Roadstar Ltd.