Business law LAW 102 – Wallies Limited (‘Wallies’) is a public company

Wallies Limited (‘Wallies’) is a public company which operates a supermarket business inBrisbane, specialising in organic, high quality fresh fruit and vegetables. Wallies is consideringopening a new store in Sydney (it owns a building which it can convert to a store). First, Walliesneeds to ensure that it can obtain quality produce (organic fruit and vegetables) from a reliablesupplier. Wallies started negotiating with the only suitable local supplier, Sydney Farm ProducePty Ltd (‘SFP’) for a contract to supply Wallies with the produce it needs for the supermarket (theamounts to be supplied will vary month-by-month).At a face-to-face meeting, Wallies’ CEO (Michael Keen) tells SFP’s Managing Director (JennyCollins) that Wallies cannot enter into any contract to purchase furniture to set up the new store(eg, new office furniture and shelves for the shop floor, etc) until it can first sign a contract withSFP for the supply of the produce for its new supermarket. Collins (SFP) said that she understoodthis, and she was also keen to finalise the negotiations and sign a final, binding contract. Threedays later the key terms of the Wallies-SFP contract are almost complete after the parties haveexchanged draft contracts and discussed (by correspondence) minor amendments to the contractdocument. In all correspondence, SFP has always made it clear that “there is no final bindingcontract between Wallies and SAFP until there is signed, final, written agreement.” There is justone final matter to negotiate, which is the amount of fruit SFP will agree to supply over theChristmas period. Collins (SFP) calls up Keen (Wallies) and tells him “I just don’t want to agreeto anything which I can’t later perform.” Keen tells Collins that if Wallies cannot order furnitureand start setting up the new store soon, there will be a costly delay. Collins says to Keen: “OK,just go ahead and buy your furniture, it will all be sweet. In the next few days my people will beable to tell me exactly how much fruit we can supply over Christmas, we can put that in thecontract and sign it. It will happen for sure.”Wallies then signs a contract with a furniture supplier for the urgent manufacture and supply of$250,000 worth of furniture. About one week later, Keen (Wallies) calls Collins (SFP) again tofind out when the supply contract will be signed. Collins tells Keen that she found out that CullsSupermarkets – a competitor of Wallies – will pay a higher price for all of the produce which SFPcan supply, and so SFP has decided to sign a supply contract with Culls instead. Keen gets angry,but Collins reminds Keen that there was no final contract signed between SAFP and Wallies.Collins says: “I am sorry but that’s the legal situation and nothing can change it.” Wallies thentells the furniture supplier to cancel the order for the furniture – the furniture supplier is now angrybecause it has bought a lot of materials for the job and already has completed half the orderedfurniture, ready for delivery. The furniture supplier says that it may get its lawyers involved ifWallies will not pay for the furniture it has ordered.Advise Wallies on its legal rights, obligations and remedies in respect of (i) the furniture supplierand (ii) SFP.