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April 20, 2014

Homework Help: BUSINESS LAW--help plz!

Posted by Lisa on Friday, April 18, 2008 at 10:55pm.

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.

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