The Mad Batter, a large wholesale bakery, sells exotic pastries to a high-end clientele. Among their most popular products right now are a number of baked goods made with ostrich eggs. The Mad Batter sells these pastries to restaurants, corporate clients, and private parties. Many of the customers feel that consuming ostrich eggs is preferable to chicken eggs because of negative associations related to industrial scale chicken egg operations.
The Mad Batter needs at least 650 eggs every month. They would like to purchase even more as demand is growing. It is extremely important for them to have reliable delivery and product so that they can fill all orders.
Bird Brain Ranch is the only supplier of quality ostrich eggs in the area and they cannot deliver more than 1000 eggs monthly. Bird Brain also sells their eggs to a start-up company that does medical research. The production will not grow in the next few years. Elmer, the owner of Bird Brain Ranch, has a monopoly position and has announced he will raise the price by 100% from $15 to $30 each.
Elmer knows that his current operation is causing unnecessary damage to the environment. He is installing new equipment and doing renovations to get certified as a sustainable enterprise. The cost of these changes is driving Elmer’s need to raise prices. The changes will likely stress the ostriches and decrease egg production by 20-50% for about 6 months. Elmer is barely scraping by because of the increased expenses. He has to be paid on time for all his sales or he will have to file for bankruptcy.
1. Using the information above, write a contract where The Mad Batter agrees to buy eggs from the Bird Brain Ranch. Make the contract as fair to each side as possible.
2. Include a section in the contract that addresses liquidated damages in case either side breaches the contract.