Wednesday, May 21, 2014

Ebasco Services, Inc. v. Pennsylvania Power & Light Co. case brief summary

Ebasco Services, Inc. v. Pennsylvania Power & Light Co.

Action was brought by power plant contractor after public utility refused to disburse retained funds. The public utility then sought to establish that the supplier of the steam turbine generator and boiler feed pump turbines was liable for consequential damages primarily cost of replacement power as a result of its role in power plant construction.
The District Court held that:
                                                              i.      (1) power plant contractor had authority from utility to negotiate and issue limitation of liability provision and such provision was valid;
                                                            ii.      (2) cost of replacement power incurred by utility was a consequential damage resulting from equipment supplier's alleged breach of warranty and so not recoverable under negotiated limitation of liability provision or, given course of dealing between the parties and trade usage, under power plant contractor's standard limitation of liability provision;
                                                          iii.      (3) limitation of liability that existed relative to breach of contract claim also excluded claims for cost of replacement power founded upon allegations of negligence; and
                                                          iv.      (4) contractor's standard contract terms were to be construed to exclude claims by public utility against equipment supplier based on strict liability.
                                                              i.      Inherent agency power refers to power of an agent, derived not from authority, apparent authority, or estoppel, but solely from agency relationship; it exists for protection of persons harmed by or dealing with servant or other agent
                                                            ii.      In order to find ratification from failure to repudiate agent's unauthorized actions, it is necessary that principal have full knowledge of material facts and circumstances attending transaction to be ratified.

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