The year is 2010 and your management consulting firm has been hired by the Smithers Metallurgical Coal Bit Company. With the demise of the coal industry through government policies the few remaining coal mines have been all purchased by the Wo Bei Gon Coal Company of China.
Being the only remaining buyer of coal bits, they negotiated a contract a year earlier that seemed fair. But, in hindsight, the contract was a mistake because it did not anticipate the fact that the EPA would impose a $45 per ton tax on all steel because its takes carbon energy to make steel. Wo Bei Gon is threatening to sue if the coal bits are not supplied at the original price.
Further, the contract had no anticipatory repudiation clause. Accordingly, your client is considering an efficient breach of contract. But, the problem is that the corporation owns a lot of real estate which represents the primary net worth of the two Smithers Coal Bit partners. The consequential damages could be awesome, wiping them both out. What is your advice?
write a 500 word paper. Do the above exercise. Then discuss the meanings of anticipatory repudiation, efficient breach of contract, and consequential damages. Tell how they relate to and affect the problem facing your client.
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