PSU contacts Shipley concerning the purchase of fuel oil heat the school building during winter months. In the phone conversation, Shipley agrees to make 8 shipments of oil to the school over a 6-month period from Oct 15, 1984 to April 15, 1985, totalling 750 gallons/month at $1.25/gallon.
Shipley makes 4 shipments. With each shipment, the delivery truck driver has PSU sign an invoice for the individual shipments. Within 10 days of shipment, PSU sends payment. All PSU checks were accepted by Shipley and deposited in their business account.
After 4 payment, Shipley send a letter to PSU that the price of fuel oil has risen drastically. They can't continue to supply feul at the terms set forth in the original agreement.
PSU receiving the letter,contacts Shipley and attempts to get them to change their mind. When they are unsuccessful, PSU close school. They refund all of the student's tuition.
PSU sues Shipley for breach of contract. Discuss the rights and defenses, if any, of probably outcome.
-Shipley might have a commercial impracticability defense.
-Depends on the details of the contract. If there are no clauses allowing for drastic rises in price to change the deal, then the school should win.
Most likely though their damages will not include the refunded tuition. They could have taken the oil under protest and paid the higher rate, or found another supplier. And then sued for the difference. It was their choice not to persue other ways of keeping the school open.
To determine the probable outcome of the lawsuit between PSU and Shipley for breach of contract, we need to examine the rights and defenses of both parties.
1. Shipley's defense: Shipley may argue commercial impracticability as a defense. Commercial impracticability is a legal doctrine that allows a party to be excused from performance if unexpected events occur that make their performance excessively burdensome or impossible. Shipley could argue that the drastic rise in the price of fuel oil made it commercially impracticable for them to supply the oil at the agreed-upon terms.
2. PSU's rights: PSU has the right to expect Shipley to fulfill the terms of the contract and deliver the agreed-upon amount of fuel oil at the specified price. If PSU can demonstrate that Shipley breached the contract by failing to supply the remaining four shipments of oil as agreed, PSU may be entitled to seek damages for the lost oil deliveries.
3. Contract terms: The outcome may also depend on the specific terms and provisions of the contract between PSU and Shipley. If the contract does not include any clauses allowing for price adjustments in the event of drastic price increases, then PSU may have a stronger case for a breach of contract claim. However, if the contract specifically addresses price adjustments, Shipley may have a more valid defense.
4. PSU's damages: It is important to note that PSU's damages would not typically include the refunded tuition paid by the students. PSU's choice to close the school and refund the tuition was not a direct result of Shipley's breach of contract. PSU could have taken the oil under protest, paid the higher rate, and then sought damages for the difference between the agreed-upon price and the higher price. PSU's decision to close the school without exploring alternative options could weaken their claim for damages.
In conclusion, the probable outcome of the lawsuit will depend on the specific details of the contract, the presence of any clauses allowing for price adjustments, and the actions taken by PSU in response to Shipley's breach. Shipley's commercial impracticability defense may be considered, but if the contract does not provide for price adjustments, PSU could potentially succeed in their breach of contract claim. However, PSU's damages are unlikely to include the refunded tuition as they had other options available to them.