Contracts

Fact pattern

Baker owns a bake shop, which mostly sells premade items arranged on the shop’s counters and shelves. Recently, though, Baker posted a notice in his shop, indicating that he would soon be piloting a program in which he would sell custom-baked items, too. The notice informed customers that Baker had the capacity to bake 24 customized cookies, scones, or biscuits per week, and to inquire with Baker if interested. The week Baker posted the notice, he received two inquiries as to custom-baked items: one from Basketmaker and another from Café Owner. 

Basketmaker owns and operates Gift Baskets Inc., a small business that assembles and delivers baskets full of various small gifts, flowers, and food. Basketmaker writes to Baker, indicating that she would like to include Baker’s scones in her gift baskets, and she would order 48 scones per week if possible. Baker writes back that at the moment, he cannot make more than 24 total custom items per week. He will, however, make the 24 scones in the flavor of Basketmaker’s choice for $5 per scone, or a total of $120 per week. Since Baker is just starting to produce custom items as a pilot program, Baker proposes that the contract run for three months.

Café Owner operates a coffee shop. He also writes to Baker, indicating that he would be interested in purchasing as many baked goods as Baker can offer, particularly scones. To that end, Café Owner asks whether Baker’s notice means that Baker can produce 24 scones, 24 cookies, and 24 biscuits per week, or just 24 total custom items per week. Baker again responds that he can bake only 24 custom items per week in total, but that he will happily provide 24 scones in the flavor of Café Owner’s choice for three months, at the price of $120 per week.

Basketmaker responds first, writing back to accept Baker’s offer and requesting that Baker make blueberry scones. The following week, Basketmaker visits Café Owner’s coffee shop to purchase some coffee beans. Then, Basketmaker and Café Owner have a short conversation, in which Basketmaker mentions that she has accepted Baker’s offer and will be buying 24 scones per week from Baker for the next three months.

Six weeks into the contract between Baker and Basketmaker, Baker writes to Basketmaker to inform her that he will be continuing his custom baking, but will be raising the price to $10 per scone. When Basketmaker objects to the price increase, Baker threatens that if Basketmaker does not immediately agree to another three months of scone delivery at $10 per scone, Baker will immediately stop delivering all scones under the current contract. 

Basketmaker responds that many of her pending gift-basket orders for the next six weeks call for scones, so Baker’s refusing to deliver more scones would jeopardize Basketmaker’s relationships with clients. Basketmaker subsequently contacts several local bakeries, which report that they can provide her with 24 scones per week at a price of $8 per scone. Basketmaker then agrees to Baker’s proposed second contract, calling for $10 per scone.

The second contract between Basketmaker and Baker has now concluded, but Basketmaker has withheld all payment under the second contract. Baker has sued Basketmaker for breach of contract, demanding payment under the contract totaling $2,880 ($10 per scone, 24 scones per week, for a total of 12 weeks).

Questions

1. What defense(s) will Basketmaker assert in response to Baker’s lawsuit? Is Basketmaker likely to succeed? Explain.
2. Could Café Owner have accepted Baker’s offer to produce 24 baked items per week immediately after his conversation with Basketmaker? Explain.
3. Assume for purposes of this question that Café Owner validly accepted Baker’s offer, so that Baker was in binding contracts with both Basketmaker and Café Owner. Baker, however, was accurate when he said he could produce a maximum of 24 custom baked goods per week. If Café Owner sued to enforce the contract, what damages could he recover? Explain.