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In: Accounting

Saber Energy, Inc. (Saber), entered into a sales contract with Tri-State Petroleum Corporation (Tri-State). The contract...

Saber Energy, Inc. (Saber), entered into a sales contract with Tri-State Petroleum Corporation (Tri-State). The contract called for Saber to sell Tri-State 110,000 barrels of gasoline per month for six months. Saber was to deliver the gasoline through the colonial pipeline in Pasadena, Texas. The first 110,000 barrels were delivered on time. On August 1, Saber was informed that Tri-State was canceling the contract. Saber sued Tri-State for breach of contract and sought to recover its lost profits as damages. Tri-State admitted its breach but claimed that lost profits is an inappropriate measure of damages.

Answer using IRAC method:

  1. In Saber's lawsuit against Tri-State, who wins and why?
  2. How would a court interpret the contract if it simply required Tri-State to pay Saber $1 Billion as liquidated damages?
  3. What are the social and ethical issues involved with the subject matter?

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Expert Solution

Answer:

ekkarill92 answered 2 years ago
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