Facts
- A coal seller and an industrial buyer entered a written one-year requirements contract under which the buyer agreed to purchase its entire coal requirements from the seller at a fixed delivered price that netted the seller $1 per ton after freight.
- The parties understood coal prices fluctuated seasonally; the fixed-price term allocated that risk between them.
- The seller delivered coal through the winter; during that period the contract price was below market, and the seller claimed it would have received about $333 more had the coal been sold at market.
- On May 13, 1891, the buyer refused to accept further coal, effectively repudiating the remaining term.
- The contract stated no minimum quantity, but the buyer’s past average usage was about 434.25 tons per month; the seller asserted expected profit on remaining deliveries of about $304.22.
- The seller sued and sought damages measured by the market value of coal delivered (less cost), effectively repricing prior deliveries above the contract rate.
Issues
- After a buyer repudiates a fixed-price requirements contract, may the seller recover for goods already delivered based on market value rather than the contract price?
- For the unperformed remainder of a requirements contract, are damages limited to provable contractual loss (e.g., lost profits shown with reasonable certainty), or may the seller obtain broader recovery when quantity is not fixed?
Decision
- The Supreme Court of Ohio affirmed the trial court.
- The seller could not disregard the express contract price and recover a higher market-value measure for coal already delivered under the contract.
- For the buyer’s refusal to accept further coal, the seller was limited to contract damages provable with reasonable certainty (typically lost profits on expected remaining requirements).
- Because the seller’s requested damages theory was inconsistent with the contract and any additional loss was not shown on that theory beyond minimal amounts, the nominal-damages result was upheld.
Legal Principles
- An express, operative contract that fixes price governs recovery for performance rendered; restitution or quantum meruit cannot be used to obtain more than the contractual bargain for goods delivered and accepted.
- A party injured by repudiation of a requirements contract is generally confined to expectation damages for the unperformed portion, such as lost profits, not retroactive “rescission-plus-restitution” repricing of completed performance.
- The breaching party may invoke the contract’s price and remedial limits as a defense against a restitutionary measure that would exceed contract damages.
- Where future quantity depends on “requirements,” damages for the remaining term must be proven with reasonable certainty; speculative projections do not support substantial recovery.
Conclusion
The court held that the fixed-price requirements contract controlled: the seller could not revalue past deliveries at market after repudiation, and any recovery for the remaining term depended on proving contractual loss (typically lost profits) with reasonable certainty, leaving only nominal damages on the record and theory presented.