Contracts – Is ABC liable

Due to high gasoline prices, American Bakeries Company (ABC) considered converting its fleet of over 3,000 vehicles to a much less expensive propane fuel system. After negotiations with Empire Gas Corporation (Empire), ABC signed a contract for approximately three thousand converter units, “more or less depending upon requirements of Buyer,” as well as agreeing to buy all propane to be used for four years from Empire. Without giving any reasons, however, ABC never ordered any converter units or propane from Empire, having apparently decided not to convert its vehicles. Empire brought suit against ABC for $3,254,963, representing lost profits on 2,242 converter units and the propane that would have been consumed during the contract period.

Is ABC liable? Explain.

 

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