Ross Enterprises have a contract with Big Steel Company Limited in respect of Information Technology (IT) Services. The

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Ross Enterprises have a contract with Big Steel CompanyLimited in respect of Information Technology (IT) Services. Thecontract was signed on January 1st 2020 and will be effectedon the April 1st 2020.
In mid-February 2020 Big Steel’s sales plummeted due to theCovid 19 pandemic. In addition, an already high long term debt, andoperating cost, as well as Big Steel’s current negative cash flowssituation placed the company in serious financial peril. Indeed, ifthey cannot find a resolution soon to deal with their cash flowproblems and debt, they will have to close operations permanentlyand send all employees home.
Upon hearing this pronouncement, the Trade Union representingworkers at Big Steel advised management that they will take strikeaction. This further affected the operations of Big Steel andresulted in a loss of production, sales and the much-needed cashflows, which is critical to pay off their debts and meet currentfixed operating cost. On March 3rd 2020, Big SteelCompany Limited filed for bankruptcy and sent all employeeshome.
On the March 4th 2020, Big Steel wrote Ross Enterprisesadvising of their circumstances and the virtual impossibility ofimplementing the signed contact for IT Services, which wasscheduled to commence on April 1st 2020.
Ross Enterprises is adamant that they have a binding arrangementand wanted to proceed as per signed contract. However, Big Steeladvised Ross that certain events, such as, Covid 19, GlobalRecession and a subsequent strike has culminated forwhich the company has little or no control of. Thus, it wasimpossible to implement the contract on the agreed start date dueto these circumstances.
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