Legal Analysis

Legal Aspects of Business

Bing Deng

Feb.3, 2014

Facts:

Mogul Oil Co (M) who agreed to supply Horatio (H) with 5000 liters of Mogul Extra gasoline at $1:00 per liter. There is a contract between M and H.

A month before the delivery date, M would not be able to supply the gasoline due to the conflict.

H could have placed an order with another firm at price $1.25 a liter.

Now H had to buy gasoline from another source at $1.50 a liter.

Big issues:

1. Was the contract breached between M and H?

a). What is the term broken?

The company M does not able to deliver gasoline to H.

b). What type of breach is it?

Anticipatory breach. Because M informed H that he can’t deliver the gasoline immediately one month before the delivery date.

c). Is the term breached a condition or a warranty?

Condition. Because H lost benefit by M breached of contract.

d). What remedy is appropriate?

Damage, the aim is full reification. M could make up money to H.

e). Is the type of loss remote?

Yes. Because before the deliver date, M thought if he delivered gasoline, he would have big lose, and H lost $0.25per liter or $0.5 per liter.

Is the type of loss you would expected is a result?

Yes. Not remote, support case: Victoria Laundry v. Newman Industries.

f). How much is the loss worth?

Another firm: 5000*(1.25-1)=$1250 ; Insisted on M: 5000*(1.5-1)=$2500

g). Did the H mitigate to reduce their loss?

M would say no.

H would say yes, because he paid another $0.5 for per liter.

Conclusion: M breached the contract, because M can not support gasoline to H, H had a lose.

2. Is the contract frustrated?

a). Is it an unforeseen event?

M would say yes, conflict is not the thing he could control.

H would say no, because it’s just a threat.

b). Did M made mistakes if he did not delivering the gas?

M would say no, because that situation is out of his control.

H would argue yes, they have a contract between each other, and that is just a...