1. 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 HMCs 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 DEIs 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.