Case Study

Edward owns a company, called MilkyWay LLC that sells milk. He owns many farms where his cows are milked.  About 500 cows are fed by a contractor, EatWell Corporation, which provides grains for the cows. EatWell has fed these cows for ten years.  About a year ago, about 50 cows died unexpectedly without any reason. MilkyWay’s management believed it had something to do with EatWell’s grains.  But they did not investigate the cause of death.  On December 1, 2017, MilkyWay offered to buy grains by an email stating, “We look forward to buying from you organic grains in the amount of three truck loads for $10,000 on January 1, 2018”.  EatWell responded back, “We always look forward to keeping our business with you.”

January 1st came and went by.  EatWell did not deliver the grains. Concerned, Edward called EatWell and they said “We never received an order. You were going to send us an order on January 1, 2018. You never did!” EatWell disagreed.  The cows did not get fed.   About a hundred (100) cows starved to death.  The milk production decreased by 20% and MilkyWay lost revenues due to this decrease in production.

EatWell felt very bad and they sent emergency shipment to Milkway without asking them first.  Milkway received the grains and immediately fed them to the remainder cows.  In haste however, Eatwell had sent expired grains.  The grains made another 100 cows very sick. The business further lost another 20% milk production and suffered 40% revenue loss.

Milkway sold whatever milk they could.  Thousands of customers became sick for days because the milk was bad milk.  Milkway did not know that the grains affected the milk, causing people to become sick. Milkway had a warning label on the milk carton saying, “Yummy Milk, It will make you happy and healthy and refreshed”. 

Milkyway became very concerned about the milk quality and now started to wonder about EatWell’s grains.  They called the Health Office and the government dispatched an inspector to EatWell.  When inspector got there, EatWell’s staff treated him very nicely.  They took him to a fancy lunch and fed him steaks and lobster tails.  Then at the restaurant they drafted a contract saying that if the company paid the inspector $5,000, that will be considered as a fine for any violations that might be going on at the company. Further that inspector will not audit anything further.  Both the inspector and EatWell’s representative, Adam, who happens to be 16 years old, signed the agreement.  The money was given to Inspector and he took it to his friend, Jessica.  He told Jessica everything and that he can be criminally liable if he deposited money in his account. So Jessica agreed to help  and deposited $5000 in her account.

EatWell Corporation has a bank account but the owner, Jim, usually uses his personal checkbook to write business expenses. The corporation has a board of five members, and they do hold formal meetings every month. They also retain meeting minutes.   All five people are family members, and Adam also serves on the board. At the board meetings all members also talk about family politics and gossip about things not related to business. The corporation has assets worth a million dollars and liabilities of 200,000 on the books.

Please evaluate every claim that any party (including the government) can bring against any other party, the theory of the claim, the strengths and weaknesses, defenses, and likelihood of prevailing on each claim.  Analyze and provide detailed reasons.