Question
Southern Fuels Co. and Langham-Hill Petroleum, Inc. are both in the business of buying and selling large quantities of petroleum products. In October, the parties
Southern Fuels Co. and Langham-Hill Petroleum, Inc. are both in the business of buying and selling large quantities of petroleum products. In October, the parties entered into a fixed price contract wherein Southern agreed to purchase 4.2 million gallons of No.2 fuel oil at a specified price per gallon to be delivered in four monthly installments. The contract included aforce majeureclause. The first three monthly shipments of oil were purchased by Southern as agreed. In January of the next year, the price of oil in the world market collapsed as a result of Saudi Arabian attempts to regain its share of the world oil market. Southern refused to purchase the last shipment under the contract. Southern informed Langham-Hill that because the drop in world oil prices was caused by Saudi Arabians who were "outside Southern's control" that it was invoking theforce majeureclause. Langham-Hill sued for damages in the amount of $306,075. What is aforce majeureclause? Southern's basic argument is that it can now buy oil at a substantially lower price. Will Southern succeed on this basis?
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