Legal aspect question?

Gutenberg, Ink., is a large printing conglomerate that has been around for years. As standards in the printing industry were moving from the "letterpress" method to the "offset" method, Gutenberg upgraded its equipment, buying a large offset printing machine and installed it in its plant in Pennsylvania. Gutenberg didn鈥檛 think it could develop all of the lithographic plates it would need for this new printing method in a timely fashion, so Gutenberg enlisted the help of PlateCo to be its "exclusive supplier" of lithographic plates for two years. The parties duly executed a contract for this purpose. So as to serve its customer in the most effective way, PlateCo moved in next door to Gutenberg. This arrangement continued for a few months, at which time Gutenberg shuffled its operations around for unrelated reasons, moving the big offset printing machine to Connecticut. Gutenberg's operation in Connecticut had an in-house lithograph plate function. This situation meant that Gutenberg didn鈥檛 need PlateCo's services anymore. PlateCo, its offices moved and its main customer gone, comes to you, its lawyer, to discuss its legal options.


Can PlateCo sue anybody? For what? Does the UCC offer any likely relief?

If PlateCo has a colorable case, how might Gutenberg defend the claim?

Was this question on your bar exam?

Breach of contract if the contract was broken before the two year period had expired.

PlateCo (hereinafter "P") has a cause of action against Gutenberg, Inc. (hereinafter "GI") for its clear breach of the contract. The only tricky part is working out what damages P has a right to recover from GI. The facts are designed to make a non-lawyer feel sorry for P, which moved its location. However, unless the contract required P to do so, P has no right to recover the costs associated with its relocation. It was a risky move on P's own initiative that didn't pan out. P can only recover what it would have reasonably expected to receive under the contract, i.e., the profits it would have made performing the contract (not just the price, which would omit the costs P would have incurred in performing under the contract). However, a plaintiff in a contracts case is required to mitigate the damages, which -- in your case -- would require P to go looking for replacement business. P will be able to recover reasonable costs associated with finding a replacement customer. P will have its damages reduced by the amount it receives from any replacement customer (or that it would have received from one if it had made reasonable effort to find one). P will be able to recover the difference in its profits if the replacement customer(s) turn out to be less profitable than the GI contract would have been. In sum, P's recoverable damages equal the expected profit under the GI contract minus the profit obtainable by finding replacement customers. P's recoverable damages do not include costs associated with its relocation, and P has a duty to go out and find the best replacement customer(s) it can.

Whether the UCC provides this relief in the instant case depends on whether the contract specifically made the UCC the governing law of the contract or whether the UCC's provisions have been adopted into statutory law in the jurisdiction whose laws govern the contract. Neither of these is certain from your description, so it is undeterminable whether the UCC offers any relief. (Note that it is a model code without any legal authority unless specifically enacted by a relevant legislature or adopted as the governing law by the parties to the contract.)

Gutenberg has little defense, except that its reasons for moving should protect it from any allegations that it acted in bad faith by entering into and then breaching the contract. GI clearly breached the contract and is liable for the damages described above. Gutenberg should not defend the claim but should instead offer to settle it for the amount of those damages, minus the amount that P should reasonably expect to spend on attorney's fees, etc., if it proceeds with litigation.