Debate topics: Contracts

1. Issue: breach of contract. Colorado Bicycle Tours & Rental, LLC (CBTR) ordered 75 standard touring class bicycles from BIKE, Inc. (BIKE). The terms and conditions of the purchase are set forth in the contract and accompanying purchase order. Due to a work stoppage over a labor dispute, BIKE’s production of standard touring bicycles was seriously deficient in the months following CBTR’s order placement. Because BIKE was aware of CBTR’s immediate need for bicycles (the contract stated that “time is of the essence”), BIKE shipped 23 discontinued model bicycles, 20 standard touring bicycles and 12 deluxe touring bicycles. While the discontinued bicycles were not to specification, the deluxe bicycles exceeded specifications, although they were invoiced at the same price as the standard bicycles that met specifications.

After shipment, but prior to receipt of the bicycles by CBTR, the president of BIKE, Barbara Wilson, personally called Donna Dufresne, CBTR’s purchasing manager, to explain the situation and asked whether the substituted bicycles were acceptable. Dufresne reluctantly ok’d the purchase in a telephone conversation with Wilson. The contract indicated that any material changes to the agreement had to be in writing and agreed to by authorized representatives of the parties. Charlene Smythe, CBTR’s CFO, was the authorized representative of CBTR, while Wilson was BIKE’s authorized representative.

When the bicycles were unpacked at CBTR, Smythe was alerted that the quantity and quality of the bicycles was different than those ordered. When confronted by Smythe, Dufresne admitted verbally authorizing the changed purchase Furious, Smythe called Wilson and threatened to sue if BIKE did not provide the bikes ordered by the time specified in the contract. Wilson knew that it would be impossible to properly