Muskoka Fuels Inc required a fuel storage tank that would last for at least 10 years. It

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Muskoka Fuels Inc required a fuel storage tank that would last for at least 10 years. It contacted Hassan Steel Fabricators Ltd, which is a company with a great deal of experience in the field. Under a contract with Muskoka Fuels, Hassan Steel designed, manufactured, and delivered a tank. After receiving that tank, Muskoka Fuels inspected it, found no sign of problems, and put it into service. Five months later, the purchaser discovered that a substantial amount of fuel had leaked onto the ground through a small hole that had developed at the bottom of the tank. That hole remains something of a mystery. The expert evidence has established that it was caused by "microbally induced internal corrosion." In other words, bacteria had eaten through the metal walls of the tank. Scientists still cannot explain exactly how that process works. At the time of the parties' contract, however, most of the companies that manufacture fuel tanks were aware of the phenomenon and knew that problems could be prevented by installing protective shields inside fuel tanks. Hassan Steel, in contrast, was completely unaware of the entire issue and the tank that it delivered to Muskoka Fuels did not contain a protective shield. The buyer now claims that the seller is liable for breach of contract. The seller, however, relies on the fact that the parties' written contract merely stated the type of tank that it was to create and deliver, the price that was to be paid, and the delivery date. Is Hassan Steel liable to Muskoka Fuels? Explain your answer.

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Managing the Law The Legal Aspects of Doing Business

ISBN: 978-0133847154

5th edition

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

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