Question

Val’s Foods signs a contract to buy 1,500 pounds of basil from Sun Farms, a small organic herb grower, if an independent organization inspects the crop and certifies that it contains no pesticide or herbicide residue. Val’s has a contract with several restaurant chains to supply pesto and intends to use Sun Farms’ basil in the pesto to fulfill these contracts. When Sun Farms is preparing to harvest the basil, an unexpected hailstorm destroys half the crop. Sun Farms attempts to purchase additional basil from other farms, but it is late in the season, and the price is twice the normal market price. Sun Farms is too small to absorb this cost and immediately notifies Val’s that it will not fulfill the contract.

Suppose Sun Farms supplies the basil that survived the storm but the basil does not pass the chemical-residue inspection. How might Val’s refuse to perform the contract?

Under what legal theory or theories might Sun Farms claim that its obligation under the contract has been discharged by the operation of law?

Suppose Sun Farms contacts every basil grower in the country and buys the last remaining chemical-free basil anywhere. Nevertheless, Sun Farms is bale to ship only 1,475 lbs. to Val’s. Would this fulfill Sun Farm’s obligation?

Now suppose Sun Farms sells its operations to Happy Valley Farms. As part of sale, all three parties agree that Happy Valley will provide the basil as stated under the original contract. What is this type of agreement called?