Tuesday, December 3, 2013

Aluminum Company of America v. Essex Group, Inc. case brief

Aluminum Company of America v. Essex Group, Inc. case brief summary
499 F.Supp. 53 (1980)


CASE SYNOPSIS
Plaintiff sought reformation of a contract, or a declaratory judgment that defendant's breach excused plaintiff's further performance under the agreement along with an award of damages, or termination of the agreement; defendant counterclaimed, seeking enforcement of the agreement and the award of damages for plaintiff's failure to deliver in accordance with the agreement.

CASE FACTS
Plaintiff brought an action against defendant seeking either an equitable reformation of the contract price due to the effects of inflation on the cost of producing aluminum, or enforcement of an oral amendment and an award of damages for defendant's breach of the modification, or recognition of the termination of the agreement.

DISCUSSION

  • The court found that plaintiff was entitled to relief under the doctrine of impracticability. 
  • The court used a four factor test when deciding to allow reformation of the contract, analyzing the parties' prevision of the problems that eventually upset the balance of the agreement and their allocation of the associated risks, the parties' attempts to limit the risk, the existence of severe out-of-pocket losses, and the customs of the industry. 
  • The court formulated a remedy modifying the price term of the contract in light of the circumstances that upset the price formula.

CONCLUSION
The court determined that plaintiff was entitled to reformation of the contract between the parties, but denied plaintiff's request for declaratory judgment excusing further performance plus damages or termination of the agreement, and denied defendant's counterclaim seeking enforcement of the agreement and the award of damages.

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