The plaintiff sued the defendant for breach of contract, and the defendant counterclaimed. Explain the rights and remedies of the parties.
The plaintiff contracted with the defendant to deliver liquid nitrogen to the defendant’s oil refinery production facility located in Belle Chase, Louisiana. The defendant uses liquid nitrogen to ensure the safe operation of its plant. The contract was a “requirement” contract—deliveries were based on how much liquid nitrogen the defendant had in its tanks. As a result, the plaintiff typically made deliveries seven days a week and sometimes several times a day. The defendant claims that the plaintiff repeatedly failed to deliver the liquid nitrogen on time, thereby dropping the liquid nitrogen to dangerously low levels and compromising the safety of the plant and its personnel. The contract provided that if the plaintiff failed to deliver the liquid nitrogen as required, the defendant’s sole remedy would be to purchase the product from another supplier and charge the plaintiff for the additional expenses incurred. The defendant did not exercise this right because it claims it was unable to purchase nitrogen from other suppliers. However, on the only occasion the defendant actually tried to purchase nitrogen from another supplier, it was successful. The plaintiff sued the defendant for breach of contract, and the defendant counterclaimed. Explain the rights and remedies of the parties.
Explanation for the right of each party in the contract is as follows:
Defendant: Defendant needs to run the business based on the raw material supplied by the plaintiff, so it is an essential element for the safety of the company. Defendant had to work in a safer environment. For this reason, the defendant placed an order with different supplier at a lower price. Additionally, the defendant did not possess the knowledge of their exclusive rights. It has been done unconscionably so that remedy to limit the damages can be claimed by the defendant.
Plaintiff: Plaintiff has the right to sue the defendant for breach of contract. Plaintiff faces incidental damages because of the economic loss in their business due to the actions of the defendant. The breach has taken place without the knowledge of the plaintiff under the statute of limitation. For this reason, the remedy for the buyer's action can be claimed by the plaintiff.
The rights of defendant are as follows:
Defendant has faced a loss due to inadequate supply of the product from the plaintiff. The product is also considered to be essential for the functioning of the business, so that the defendant, despite having breached the contract, has exclusive remedy to procure the raw material from other suppliers. The exclusive remedy is that based on the consequential damages, the defendant had purchased the goods only once to operate in a safe environment.
The rights of plaintiff are as follows:
The contract gives the plaintiff the right to be the only supplier of the raw material to the defendant. Plaintiff had the right to claim when the contract was breached by the defendant. Remedy of buyer's default can be claimed by the plaintiff as the buyer has purchased the goods outside of the contract.