Donald Evans Inc (DEI) supplies materials to the oil industry in Alberta. Although the company deals in

Question:

Donald Evans Inc (DEI) supplies materials to the oil industry in Alberta. Although the company deals in several types of equipment, the vast majority of its profits are generated by a device called a heavy oil extraction coupler (or, more simply, a "coupler"). The manufacture of those couplers required the use of widgets purchased from Harjat Machine Corp (HMC). HMC is the only source of such widgets. Two years ago, the parties created a contract that obligated HMC to provide widgets to DEI for 10 years. One year ago, however, HMC breached that contract by refusing to perform the contract unless DEI promised to pay a higher price. As it was entitled to do, DEI immediately discharged the contract for breach of condition. HMC now concedes that it had acted wrongfully and that it is liable to DEI. The more difficult question pertains to the measure of relief. There are three possibilities: (i) Because DEI cannot manufacture its couplers without HMC's widgets, DEI is entitled to the full value of the profits that it will lose for the remainder of the full life of the parties' 10-year contract: (ii) DEI could have rearranged its manufacturing process, within two years, to produce its couplers without widgets from HMC. Damages could be confined to DEI's lost profits during that period; and (iii) within a very short time of its own breach, HMC admitted that it had acted wrongfully. It therefore offered to create a new contract with DEI to supply widgets for either (a) the remainder of the time contemplated by the original contract, or (b) the length of time that DEI would require to develop a manufacturing process that did not involve widgets. Which solution would a court most likely adopt? Explain your answer.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Managing the Law The Legal Aspects of Doing Business

ISBN: 978-0133847154

5th edition

Authors: Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer

Question Posted: