- Review the Critical Legal Thinking Case 18.4 on page 324. It is entitled Tri-State Petroleum v. Saber Energy, Inc. Tri-State admitted its breach but claimed that lost profits are an inappropriate measure of damages. Using IRAC, who wins?
Issue: In the case of Tri-State Petroleum v. Saber Energy, Inc., the central issue was based on the right to recover lost profits. Mainly, both companies entered into an agreement where Saber was to sell 110,000 barrels of gasoline to Tri-State. After successful delivery of gasoline, Tri-State canceled the contract which prompted Saber to sue to recover lost profits.
Rule: In the ruling, in this case, favored Saber Energy, Inc based on the fact that Tri-State Petroleum breached the contract as stated in section 2708. It was wrong for Tri-State Petroleum to withdraw the contract after Saber Energy meet its consideration. Thus, Saber Energy was compensated for the loss of profit.
Application: This case is applied to punish parties that breach terms of agreement after that other party has met the consideration. Thus, any party that breaches the contract in a manner depicted by Tri-State Petroleum is responsible for damages sustained by the other party.
Conclusion: The decision of the court to make Tri-State Petroleum responsible for the lost profit was reached based on the fact that Saber Energy had met its consideration.
- Review the Critical Legal Thinking Case on Liquidated Damages on page 260 of the textbook. The case is entitled Uzan v. 845 UN Limited Partnership. You do not need to write in IRAC for these questions. How do liquidated damages differ from actual damages? Do liquidated damages serve an important business purpose?
The construction of the T world tour as a story luxury condominium was made through non-refundable down payment. In terms of liquidated damages, the company was supposed to retain the 25% if the buyer failed to complete the process of buying.
Hakan and Cem entered into an agreement to purchase two apartments each from the company. These apartments were located in the top floors. They also made a down payment of $8 million. The attack of the building on September 11 made Hakan and Cem to withdraw the contract and the company retained the down payment.
Hakan and Cem decided to sue the company claiming a refund of their down payment based on the liquidated damage clause. In this case, liquidated damage differs from actual damage because Hakann and Cem used liquidated damage that fixes sum payable as damage which was a down payment of 25%. For actual damage, it would be impossible for the brothers to prove in this case. Liquidated damages are essential in business because a person can prove loss as a result of delay.