Palatka Costumes & Caps LLC ("PC & C") is a large props company formed in 1957, and Frodo Flags Corporation is a small, local flag manufacturer formed in 2015. These two businesses never had any dealings with each other until they recently entered into a contract, with terms all drafted by PC & C. The contract provides that PC & C shall purchase 1,000 flags that Frodo Flags will specially design for PC & C. The contract further provides that PC & C has the right to initiate, on a weekly basis, purchase orders of up to 100 flags until the contract's total number of flag purchases - 1,000 flags - has been met. Also, the contract includes a clause stating that PC & C can cancel its obligation to pay for the remaining flags at any time if any Frodo Flags shipment does not arrive on the exact day as stated in a particular purchase order; this last provision is included in the contract even though time was of little importance to PC & C. The first shipment of 100 flags arrives a day late, and PC & C decides to cancel the entire remainder of flags due, leaving Frodo Flags with 900 flags displaying a PC & C logo. Frodo Flags does not have a secondary market in which to sell these flags and decides to offer PC & C the flags at 30% of the nitial price. What is Frodo Flags' best claim to enforce the original contract? O Breach of fiduciary duty. PC & C had a fiduciary duty to handle the contractual relationships with proper ethics. O Promissory Estoppel. Frodo Flags needs the revenue from the original order to continue to operate and make flags. O Unconscionability. The clause that states PC & C can cancel the order at any time if shipments arrive one day late is grossly unfair. O Undue Influence. PC & C used its power to influence Frodo Flags to reduce the cost to 30% of the initial price. Incapacity. Frodo Flags is, in terms of its business experience, the status of a legal infant.
Palatka Costumes & Caps LLC ("PC & C") is a large props company formed in 1957, and Frodo Flags Corporation is a small, local flag manufacturer formed in 2015. These two businesses never had any dealings with each other until they recently entered into a contract, with terms all drafted by PC & C. The contract provides that PC & C shall purchase 1,000 flags that Frodo Flags will specially design for PC & C. The contract further provides that PC & C has the right to initiate, on a weekly basis, purchase orders of up to 100 flags until the contract's total number of flag purchases - 1,000 flags - has been met. Also, the contract includes a clause stating that PC & C can cancel its obligation to pay for the remaining flags at any time if any Frodo Flags shipment does not arrive on the exact day as stated in a particular purchase order; this last provision is included in the contract even though time was of little importance to PC & C. The first shipment of 100 flags arrives a day late, and PC & C decides to cancel the entire remainder of flags due, leaving Frodo Flags with 900 flags displaying a PC & C logo. Frodo Flags does not have a secondary market in which to sell these flags and decides to offer PC & C the flags at 30% of the nitial price. What is Frodo Flags' best claim to enforce the original contract? O Breach of fiduciary duty. PC & C had a fiduciary duty to handle the contractual relationships with proper ethics. O Promissory Estoppel. Frodo Flags needs the revenue from the original order to continue to operate and make flags. O Unconscionability. The clause that states PC & C can cancel the order at any time if shipments arrive one day late is grossly unfair. O Undue Influence. PC & C used its power to influence Frodo Flags to reduce the cost to 30% of the initial price. Incapacity. Frodo Flags is, in terms of its business experience, the status of a legal infant.
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Transcribed Image Text:Palatka Costumes & Caps LLC ("PC & C") is a large props company formed in 1957, and Frodo Flags
Corporation is a small, local flag manufacturer formed in 2015. These two businesses never had any
dealings with each other until they recently entered into a contract, with terms all drafted by PC & C.
The contract provides that PC & C shall purchase 1,000 flags that Frodo Flags will specially design
for PC & C. The contract further provides that PC & C has the right to initiate, on a weekly basis,
purchase orders of up to 100 flags until the contract's total number of flag purchases - 1,000 flags
has been met. Also, the contract includes a clause stating that PC & C can cancel its obligation to
pay for the remaining flags at any time if any Frodo Flags shipment does not arrive on the exact day
as stated in a particular purchase order; this last provision is included in the contract even though
time was of little importance to PC & C.
W
The first shipment of 100 flags arrives a day late, and PC & C decides to cancel the entire remainder
of flags due, leaving Frodo Flags with 900 flags displaying a PC & C logo. Frodo Flags does not have
a secondary market in which to sell these flags and decides to offer PC & C the flags at 30% of the
initial price. What is Frodo Flags' best claim to enforce the original contract?
O Breach of fiduciary duty. PC & C had a fiduciary duty to handle the contractual relationships with proper
ethics.
O Promissory Estoppel. Frodo Flags needs the revenue from the original order to continue to operate and make
flags.
O Unconscionability. The clause that states PC & C can cancel the order at any time if shipments arrive one day
late is grossly unfair.
O Undue Influence. PC & C used its power to influence Frodo Flags to reduce the cost to 30% of the initial price.
O Incapacity. Frodo Flags is, in terms of its business experience, the status of a legal infant.
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