Question: Was Manuco entitled to terminate the contract? Identify the contract law principles that each of Paper co and Manuco may argue should apply and explain the basis of the principles and how they should apply.

2)A pulp and paper company (“Paperco")entered into a written contract with a manufacturer of heat exchange and turbine equipment (“Manuco"). According to the agreement, Manuco was to design, manufacture and deliver a heat recovery steam generator for Paperco's pulp and paper mill for a purchase price of $7.5 million. Paper co would arrange to install the equipment in its mill as part of a cogeneration system for the purpose of converting steam into electricity. According to the agreement, Manuco was to begin manufacturing the equipment on February 1,2019 and deliver the finished product to Paper coon or before March 30, 2019. The agreement provided that Paperco would pay the $7.5 million purchase price in monthly installments over the manufacturing period. Each installment of the purchase price is due by Paperco on the last day of the month for which the installment is to be made. If Paper co fails to pay any installment within 10 days after such an installment becomes due, Manuco would be entitled to stopper forming its work under this contract or terminate this contract. As the work progressed,Manuco invoiced Paper co for each monthly installment. Although Paperco paid the first installment on time, it was more than 20 dayslate in paying each of second, third, fourth, fifth

and sixth installments. Manuco never once complained about the late payments, even when Paperco apologized for the delayed payments and commented in meetings with Manuco thatPaperco's current cash flow difficulties were the reasons for the late payments. Manuco even commented at three separate meetings, in response to Paperco's acknowledgement of itscash flow difficulties, that it understood that Paperco had cash flow problems and that Manuco was prepared to wait for the late payments provided the payments weren't more than 30days late. By the middle of September 2019, it became apparent that due to serious cost overrun resulting from its own design errors and lack of productivity, it would stand to lose a substantial amount of money on the contract by the time the equipment would be completed.Although the installment for August had been invoiced and was due on August 31, 2019,Paper co had not paid it by September 15, 2019.On September 15, 2019, Manuco terminated the contract._



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