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Hindsight is always twenty-twenty….

Contracts are designed as a meeting of the minds of the parties, and meant to lay out the responsibilities and obligations of the parties. But, when a contract is not clear, the question of what the parties intended can become muddy. While the parties may have had a good idea at the beginning of the relationship, things can change, and sometimes the contract fails to encompass that change.

That is when things get interesting. One party claims the other party has breached the contract and a lawsuit follows. As is the case with the Florida Department of Citrus and a New Jersey company over a contract involving the approval of  an abscission chemical with the U.S. Environmental Protection Agency (EPA).

The company was also supposed to manage the commercial development of the chemical. Apparently, the chemical, CMNP, was to help the adoption of mechanical harvesting of citrus fruit, as the department feared manual harvesting would become impractical as migrant workers became more difficult to obtain.

The chemical allows the fruit to separate more easily from the tree, better allowing the use of mechanized harvesting. However, CMNP needed EPA approval, and the New Jersey company was to facilitate that approval. After six years, the department renewed the contract, having been told the EPA needed more time.

The renewal only provided for payments to the company until February of 2013, when the EPA was supposed to make their decision. Then, the company warned the department that the EPA was going to need even more time, and the department refused to authorize additional spending. The company then withdrew the application for CMNP, to prevent a negative determination by EPA.

The department terminated payments in February, after the company stated it was unsure if EPA would ever approve the chemical. The department claims that that did not breach the agreement, because the agreement only authorized payment through February.

Perhaps the agreement was poorly worded regarding this possibility, because when the agreement was drafted everyone was overly optimistic regarding approval and they failed to consider what would happen if the approval failed. A judge now gets to sort out the contract.

Source: TheLedger.com, “Dept. of Citrus Locked in Lawsuit,” Kevin Bouffard, September 17, 2013

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