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Let’s say your company, LottaLemonade, Inc., has a 10-year contract with LemonGrowers, Inc., for the purchase and delivery of 100 tons of lemons every month. After two years into the contract, the country goes into a deep recession and demand for LottaLemonade’s product is cut in half. LottaLemonade is losing substantial amounts of money as a result of this contract with LemonGrowers. Thus, LottaLemonade no longer needs or wants 100 tons of lemons a month from LemonGrowers. In fact, LottaLemonade learned that it can get a much better deal on lemons from another source.
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