Legal Dispute between Berry Nice and Meggles of Margarets

We have just taken on a new client, Berry Nice Pty Ltd (Berry). Berry is an online supplier of garden products. Berry entered into a contract with Meggles of Margarets (Meggles), in 2020 for the supply of 10,000 litres of fish emulsion. Price was $1000 dollars per 1000 litre International Bulk Container (IBC) (so ten containers) with Meggles to pay transport. Payment was by invoice with 60 days to pay. Berry sent the ten IBC down to Meggles (Meggles is in Margaret River) via Meggles preferred transport company early January 2021 as agreed. The invoice, due to be paid on 12 March, was paid on time. Sage Wise is the manager at Berry. I saw her in my office this morning. She brought an email from Meggles, text as follows: Dear Ms Wise, I write in regard of the fish emulsion you supplied us with on 9 January 2021. Half of the product was on sold to Evans & Morena, a local winery. They have contacted us demanding a refund as they believe the product unsuitable for use. They have pointed to significant financial loss incurred because of your product’s unsuitability. We have refunded their money. We are now returning the 5 unused IBC’s to you. As the product is unsuitable, we require that you refund us our payment in full, plus cartage at $1,500.00 (cartage down and cartage return to you). MadCol Transport took possession of the 5 unopened IBCs today and you should have them by tomorrow. We expect our refund within 7 business days and will instruct our lawyers to commence an action against you in the Magistrates court seeking damages, being $11,500.00 for the product and cartage, plus incidental costs. Yours faithfully Shan Ludwig Managing Director, Meggles of Margarets Sage tells me she happens to be a friend of the winemaker at the winery next door to Evans & Morena (Evans). Evans is one of the biggest wineries in the region and has two specialty restaurants nestled among its vines. Sage’s friend has told her the events around the fish emulsion are the talk of the town. It seems that the vineyard manager at Evans misread the instructions and instead of applying the fish emulsion at the standard 100/1 ration, it was applied at a 10/1 mix. There was no harm done to the vines, but the smell was incredible. Sage’s friend reckons he had to go out when the wind blew from the west, and both restaurants were closed for a week over the busiest time of the year. Sage told me she does not really mind them returning half the product. She says sales are booming (Covid gardeners she says) and that they can make more money decanting it and selling it in smaller packages. She does not agree that it is not fit for purpose and does not see how Meggles refunding money to someone who was too silly to read instructions should be her problem. She tells me she does not see why Berry should pay the transport either. Sage also told me she thinks it’s all a bit of a scam. Evans is owned by a large corporate firm that also owns Meggles. This is not common knowledge, but she brought a company search that showed that what she is alleging is true. In short, yes Meggles refunded the money, but in reality, it was just an internal transfer. Sage pointed out that despite the wrong application rate Evans has had the benefit of a high-quality fertiliser and has paid the normal commercial price for that. I have advised her to make an offer to settle the matter before Meggles commences any litigation. Would you please draft a Calderbank Offer, by way of a letter to Meggles, offering to accept the return of the unused portion of the fish emulsion, being 5 unopened IBCs. My view is that Meggles has no contractual right to return the product, but Berry is fine with taking it back and refunding half the purchase price. Explain the following: Order 24A - Offer of Comprise; and Calderbank Letters Make sure you set out in which circumstances each can be used, the possible effects of each and the differences between them.