Performance and Breach of Sales Agreements
LAW001 Business Law 1
Week 13 Assignment 1
Performance and Breach of Sales Agreements
Chapter 22 – Performance and Breach of Sales and Lease Agreements
A. Read the case Flint Hills Resources v Jag EnergyLinks to an external site..
B. Study the WhiteboardLinks to an external site. and
ProfJ videoLinks to an external site.
C. Carefully explain in your own words (paraphrase and do not copy from the case) the following statements:
“In the event of any adverse claim, lien, dispute or lack of information affecting or concerning title to the property or to the crude oil proceeds from lands described in this agreement, Buyer may withhold payment for the crude oil until the claim, lien, dispute or lack of information is settled or resolved, without liability for interest. If requested, Seller agrees to furnish evidence of title satisfactory to Buyer.”
“The district court determined that Flint Hills breached the parties’ contract by unreasonably suspending its own performance. For the following reasons, we reverse the district court and render judgment in favor of Flint Hills.”
“The district court interpreted this language to create a limited right to withhold payment — one available where a third-party brings an adverse claim of ownership or where there is objective evidence of bad title.”
“Under the plain terms of the agreement, Flint Hills could suspend payment upon any “dispute or lack of information affecting” title. This right to suspend payment based on a lack of information was not conditioned on the presence of an adverse claim, verifiable proof of theft, or objective evidence of wrongdoing.”
“The district court improperly imposed extra-contractual requirements of commercial reasonableness and verifiable proof on Flint Hills. Thus, the district court committed clear error in determining that Flint Hills breached the contract.”
Explain who won and provide the main legal reasoning.
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