Contracts Keyed to Calamariback
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A shipping company incorporated in a state, owned six supertankers and was engaged in shipping crude and refined oil between the Persian Gulf and Europe, and Asia and North America. The shipping company signed a ten-year contract with an oil company, agreeing to ship 100,000,000 barrels of oil per year from Kuwait to New Orleans at a price of $2.05 per barrel. Cost accountants at the shipping company estimated a gross profit of nine cents per barrel on the transaction. In 1985, Persian Gulf hostilities between Iran and Iraq caused the shipping company’s insurance premiums to quintuple. The shipping company continued to ship the oil company’s oil despite the reality that it could not earn a profit at the $2.05 per barrel price. The oil company earned a substantial windfall when crude prices rose $6.00 per barrel in response to the Gulf hostilities.
In 1987, the Gulf became closed to shipping. The oil company notified the shipping company that it expected the shipping company to honor its shipping agreements. The most economical means to ship the oil was to truck it 1,200 miles over land to the Saudi Arabian Ru-Ba-Khali pipeline and then on to Oman, where tankers could be filled in the safe waters of the Arabian Sea. The total shipping cost to the shipping company was approximately $8.00 a barrel.
The shipping company’s best chance to suspend its agreement with the oil company is by pleading the doctrine of:CorrectIncorrect
A candle maker who owned a bee farm sold the farm to a beekeeper. Because the candle maker was still interested in making beeswax candles, the contract provided that the candle maker reserved the right to purchase all of the beeswax produced by the beekeeper during the next five years at the current market price at time of delivery, and the beekeeper agreed to supply “in any event a minimum of 100 pounds of beeswax per month during that period.” For one year, the beekeeper delivered to the candle maker and the candle maker paid for all of the beeswax produced by the beekeeper. As the first year of the contract ended, the beekeeper was stung by a bee and, due to an allergy, became so seriously and permanently ill and impaired as to be unable to attend to the bees. He gave the candle maker prompt notice that he would be unable to continue, and from that time on he never made another delivery of beeswax to the candle maker.
Assuming that contractual obligations existed between the candle maker and the beekeeper, the beekeeper’s refusal to perform was:CorrectIncorrect
An oil company had the following contract with a refinery:
“The oil company agrees to purchase all of its refined heating oil for the next six months from the refinery. The price will be determined by the heating oil price on the Mercantile Exchange on the day of delivery. Guess reserves the right to purchase all or part of the refinery’s output. The refinery agrees to produce a minimum of 10,000 barrels of heating oil per day.” The contract was written and properly authenticated.
After three months, the refinery asked the oil company if they would agree to lower the minimum to 5,000 barrels per day. The oil company agreed, but only if the refinery agreed to accept payment after twenty days rather than after ten days as they had previously agreed. The refinery and the oil company shook hands on this new arrangement.
Four months into the contract, a tremendous explosion destroyed the refinery’s primary refinery. The refinery stopped delivering oil to the oil company.
Assume for this question only that the contract and modification were valid. For what reason would the oil company not be able to win an action for breach after the explosion?CorrectIncorrect
A planter contracted with a homeowner to plant grass, trees, and bushes on the plot where the homeowner was constructing a new house. The homeowner was afraid that the job would not be completed before the first frost, so the parties agreed that “all work will be completed by November 1.” The planter also agreed to extend a warranty of “The homeowner’s 100 percent satisfaction.” The contract provided that the homeowner would be obligated to pay in full within fifteen days of the work’s completion.
The planter’s work was delayed because the homeowner was delinquent in paying the general contractor building the house. The general contractor suspended work for two months. The planter could not begin the landscaping until the house was completed and all building-related refuse was carted away. The planter completed landscaping on November 7. The homeowner was dissatisfied with the results. When the planter asked what he specifically did not care for, the homeowner shrugged his shoulders and said, “I don’t know, I just don’t like it.”
Which of the following choices is LEAST accurate?CorrectIncorrect