PBUSOI ????”summer 2013 Final Project Name: Alice 1 . Case Name, Citation, and Court PETROLEUM REFRACTIONATING CORPORATION v. KENDRlCK OIL CO. 65 F. 2d 997 (1933) NO. 774. Circuit Court of Appeals, Tenth Circuit. 2. Key Facts A. The Kendrick Company ordered a special grade of oil 1,500,000 gallons, 10% more or less from the Petroleum Corporation on January 15, 1932. B. Under the terms of the contract, the Petroleum Corporation agreed either to sell and deliver the oil or to discontinue making the grade of oil contracted for, and to ive five days’ notice of cancellation of the contract.
C. On February 16, 1932, the Kendrick Company notified the Petroleum Corporation to discontinue accepting the oil after 62,601 gallons of such oil already be delivered for the reason that the grade of oil being shipped was not of the standard stipulated in the order D. On February 21, 1932, the Petroleum Corporation resold the portion of the oil remaining undelivered under such contract at 25 cents a barrel. E. The Petroleum Corporation brought this action against the Kendrick Company to recover damages for breach of contract. F.
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The Kendrick Company demurred to the petition on the ground that it did not state facts sufficient to constitute a cause of action. G. The trial court held that there was no consideration for the promise of the Kendrick Company to purchase, and sustained the demurrer. H. The Petroleum Corporation instituted an appeal. 3. l=lssue Would a discontinuance by the Petroleum Corporation to manufacture the grade of oil contracted for result in such a detriment to it as would constitute a consideration for the promise of the Kendrick Company to purchase? 4. R=Rule
A benefit to the promisor or a detriment to the promisee is a sufficient consideration for a contract. 5. A=Analysis A. The detriment need not be real; it need not involve actual loss to the promisee. The legal detriment is distinguished from detriment in fact. It is the giving up by the promisee of a legal right; the refraining from doing what he has the legal right to do, or the doing of what he has the legal right not to do. And where there is a detriment to the promisee, there need be no benefit to the promisor. B. Counsel for the Petroleum Corporation contend that the promise of the Kendrick
Company to purchase was supported by the agreement of the Petroleum Corporation either to sell, which would be a benefit to the Kendrick Company, or, in the the Petroleum Corporation. C. Under the alternative provision of the contract, the Petroleum Corporation should discontinue to manufacture the grade of oil specified in the contract, it would refrain from doing that which it had the right to do, and it would thereby give up a legal right ????” the right to continue to make the grade of oil specified. C. It follows that, under the principles above stated, the discontinuance by the
Petroleum Corporation to manufacture the grade of oil specified in the contract would constitute a detriment to it, and the promise so to do would be a sufficient consideration for the promise of the Kendrick Company to purchase. D. On the other hand, counsel for the Kendrick Company contend that whether the Petroleum Corporation should sell and deliver the oil was conditioned only by the will or wish of the Petroleum Corporation. This explanation had no regard for the legal detriment of giving up the legal right to manufacture the grade of oil specified, which as a valid consideration for the promise of the Kendrick Company to purchase.
That’s can do nothing for defending itself from the Rule. E. There are some precedents about this principle: (a) The giving up by the seller of the right to sell to others such goods as he should manufacture during a specified period has been held a sufficient consideration for the promise of the buyer to purchase such goods, although the seller was not obligated to manufacture any goods whatever. (Ramey Lumber Co. v. John Schroeder Lumber co. (C. C. A. 7) 237 F. 39; Green v. Lovejoy, 155 Minn. 41, 193 N. W. 173. (b)The giving of a preferential right to purchase personal property, in the event the owner should conclude to sell it, has been held a sufficient consideration for the promise of another to purchase, although there was no obligation on the part of the owner to sell. (Vickrey v. Maier, 164 cal. 384, 129 P. 273. ) (c)ln City of Marshall v. Kalman, 153 Minn. 320, 190 N. W. 597, Kalman agreed to purchase all the street improvement certificates which the city should issue during a specified period, at par plus accrued interest.
It was urged that the contract was ithout consideration on the part of the city because it was not obligated to issue any certificates. The court held that, although the city had not agreed to issue any certificates, it had restricted its freedom to sell to others any certificates which it might issue, and that such restriction was a valid consideration for the promise of Kalman to purchase. 6. C=Conclusion The Judgment is reversed with instructions to overrule the demurrer. The court held that the Petroleum Corporation recover damages for the Kendrick Companys breaching of contract.