The Law Office of Lynnette Ariathurai A Professional Corporation

Business contract dispute cracks open over egg supply disruption

When companies do business with one another there is almost always some type of contract in place. The contract details the terms of a business deal and makes explicit the obligations of each party in the contract in California. However, when one party of a contract does not fulfill its obligations, it could result in a business contract dispute that may need to be settled in court. It appears this is the case in a recent dispute related to a business deal between a food supplier and an egg farm.

The dispute surrounds a contract formed between Michael Foods Egg Products Co. and Hawkeye Pride Egg Farms. A lawsuit filed by Michael Foods against Hawkeye claims that the defendant breached the terms of the contract that was originally formed in late January 2014. Michael Foods is a subsidiary of cereal maker company Post Holdings Inc. The exact details of the contract remain confidential and have not been released to the public.

Michael Foods alleges that the defendant egg farm company breached the contract following a bout of bird flu, which caused a disruption in egg supplies. The plaintiff claims that the financial losses are more than $75,000, which is the minimum amount of losses required to file a lawsuit in federal court. Post Holdings claims that the bird flu outbreak affected approximately 25 percent of its annual egg volume commitments. The company aims to contain losses to $20 million during 2015.

The two companies will now be looking to present their respective legal arguments in the court of law. However, just like any business contract dispute in California, the judge will ultimately decide whether or not the plaintiff should be awarded damages for an alleged breach of contract. The party with the strongest legal argument based on evidence and testimony will be the most likely to prevail.

Source:, "Food supplier sues egg farm alleging breach of contract", David Pitt, June 23, 2015

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