Download Timmco Case Study on Breach of Contract and Ethics in Business Environment and more Thesis Accounting in PDF only on Docsity! BUS 624 Timmco Case Study BUS 624 Law & Ethics in the Business Environment Introduction Timmco is a publicly traded corporation located in Denton, TX. Since the company’s sales have been declining, they have started looking into alternatives to cut some of their costs and increase profits. As of right now, all of their products are made in the United States. In order to cut down on cost, Timmco is deciding to purchase the valves they need to continue production from a company that is located overseas. If Timmco decides to proceed with this company, they will be breaching the contract that they already have in play with Blagg Industries. The contract is supposed to last for five years and so far Timmco has only completed three of those five years. Since Timmco is the primary customer for Blagg Industries, Blagg can potentially go out of business if they lose Timmco’s contract. The valves from the company Sanco are $1000 less than the valves Blagg has been offering to Timmco. However, Timmco would have to play a role in the country’s corruption by paying the minister to obtain the necessary documents they need to operate in Slawrovia. With this situation, Timmco will breach their contract, commit negligent tort, create situations with product liability, get involved with foreign corruption, and provide deceptive advertising. Breach of Contract and Remedies As an executive, I would not approve of this plan that Timmco has. If they decide to leave Blagg industries, this will be considered breaching their contract. Breach of contract is explained as an unconditional duty and the promisor’s failure to perform the expected duties. Timmco’s situation would be explained as committing to do business with Blagg by buying 1000 valves a year at the price of $2500 per valve. This contract was made to last five years. So far, they have only committed to three and still have two years left of their contract. “When a person’s performance is due, any failure to perform that is not excused is a breach of contract. Not all breaches of contract are of equal seriousness, however. Some are relatively minor deviations, whereas others are so extreme that they deprive the promisee of the essence of what he bargained for. The legal consequences of a given breach depend on the extent of the breach” (Langvardt et al., 2019, p.536). Timmco would breach their contract with Blagg on the basis that they agreed to pay Blagg for five years not three. Not sticking to the remainder three years will cost Blagg 5 million dollars. If they used this 5 million dollars to make projections for the next two years, not only will the company have to make up for that 5 million somewhere else but they lose a customer who could have potentially renewed their contract. To determine the remedy, one must first figure out the material worth of the breech. In order to do this, the court has to ask “whether the breach deprives the injured party of the benefits that he reasonably expected. In determining materiality, courts take into account the extent to which the breaching party will suffer forfeiture if the breach is held to be material. They also consider the magnitude (amount) of the breach and the willfulness or good faith exercised by the breaching party. The timing of
