Wednesday, December 18, 2013

Kvassay v. Murray case brief

Kvassay v. Murray case brief summary
808 P.2d 896 (1991)

Plaintiff seller appealed the judgment of the Sedgwick District Court (Kansas) in favor of defendants, purchasing corporation and corporate principals, in an action to enforce a liquidated damages clause and to recover lost profits under a sales contract. The purchasing corporation and corporate principals sought review of the ruling permitting the seller to pierce the purchasing corporation's corporate veil in order to collect damages.

Plaintiff seller appealed from the trial court's decision that the liquidated damages clause in the contract with defendants, purchasing corporation and corporate principals, was not enforceable, and that lost profits were not recoverable in the breach of contract action.


  • The court held that the trial court improperly considered the seller's income when evaluating the liquidated damages claim. 
  • The applicable provision of the Uniform Commercial Code, Kan. Stat. Ann. § 84-2-718, measured only the reasonableness of the liquidated damages, and did not include the seller's income as a factor in that determination. 
  • The court reversed and remanded the matter for a decision based on the standards outlined in § 84-2-718. 
  • With regard to the seller's claim for lost profits, the court ruled that the trial court erred when it failed to apply the provision of Kan. Stat. Ann. § 84-2-708, and disallowed the claim for recovery of loss of profits on goods not yet manufactured. 
  • Further, damages were recoverable for the new business if proved with reasonable certainty. 
  • Finally, the trial court properly permitted the seller to pierce the corporate veil in order to obtain damages.

The court reversed the part of the judgment in the breach of contract action brought by plaintiff seller that found the liquidated damages clause unenforceable and refused to allow recovery for lost profits. The court affirmed the decision to pierce the veil of defendant purchasing corporation and the remainder of the judgment. The matter was remanded for further proceedings.

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