business law Anticipatory Repudiation Exercise (Extra Credit) 1. Develop a Scena
ID: 360356 • Letter: B
Question
business law
Anticipatory Repudiation Exercise (Extra Credit) 1. Develop a Scenario about two companies that are doing business together. Or an employer and employee that has an agreement - Describe the relationship. 2. There needs to be a buyer and a seller. Or an employer or an employee. 3. One of the parties is anticipating a repudiation by the other - Describe it 4. The other company is requesting adequate assurance a. Include what one party did to make the other anticipate repudiation b. And also include what the other party needs to see in order to be adequately assured.Explanation / Answer
The scenario that I will develop is with regards to two companies doing business together. In the scenario company ABC is buying apples from company XYZ.
ABC is anticipating repudiation by XYZ due to the fact that XYZ, after entering into the contract with XYZ, faced severe business losses due to wrong hedge positions taken by it. As a result it is left with no funds even for working capital and is considering for CDR (corporate debt restructuring). XYZ already had huge amount of debt in its books and its business losses have made it almost impossible for it to sell apples to ABC and fulfill the contract.
In this case ABC is requesting assurance from XYZ. What XYZ did that made ABC anticipate repudiation is that it current scenario and business condition made it impossible for it to perform the contract and sell apples to ABC.
What ABC needs to see in order to be adequately assured is XYZ showing measures that it has taken steps to fulfill its part of the contract. For instance XYZ can show that even though it is not able to grow and sell the apples itself it has entered into a contract from another grower to buy apples as per ABC’s requirements. XYZ can show documents with this regards as well to adequately assure ABC.
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