Ralph Deuschle owned an ice sculpture company. Ralph provides ice sculptures for private weddings, parties, and receptions. The Canasta Resort was a large hotel located near Ralph that was not satisfied with its current catering company's ice sculptures and its events manager liked Ralph's work. The events manager approached Ralph and indicated the Canasta would like to have an ongoing supply

Question

contract but that its needs would require Ralph to expand his business, both with additional space and 3 new employees. Ralph entered into a supply contract with the Canasta and the events manager told a lending officer at the bank where Ralph got his construction mortgage for the business expansion that the Canasta would be sending all of its business to Ralph. The Canasta then began to rethink its events focus and marketing and decided to cut back on ice sculptures. Ralph could not use the additional space and the three employees had to be laid off. The Canasta:
A) has no liability to Ralph for the downturn in amount of ice sculptures ordered if it did not guarantee a minimum amount to be purchased.
B) may be liable to Ralph under a theory of a lack of good faith.
C) is entitled to refocus its business and has not breached its contract.
D) None of the above

Answer 1

B