ENERGY PLUS CONSULTING V. ILLINOIS FUEL CO.
371 F.3d 907 (7th Cir. 2004)
NATURE OF THE CASE: Energy (P) sued Illinois Fuel (D) alleging breach of contract and
sought $720,000 in damages. The Court granted summary judgment in favor of Ds on the grounds
that the $720,000 liquidated damages provision was an unenforceable penalty clause. P
appealed.
FACTS: Washington County, Illinois' entered into a contract with P granting P the
exclusive right, for eighteen months, to contract with third parties to develop a coal
reserve. P solicited several companies. Ds and P signed an agreement which provided that P
would present Ds to the County as a potential candidate interested in exploring the reserve.
In turn, upon entering into an option contract with the County providing Ds an exclusive
right to explore the reserve, Ds would pay P $100,000. The Agreement also included a clause
that Ds shall pay to P $720,000 upon whichever shall occur first; the expiration of ninety
days from the date of execution of the Option, unless Ds has released the Option, or the
execution of a Mining Lease. The Agreement further specified that if Ds executed a mining
lease with the County, Ds would also pay P $720,000 on the date of execution for the next
four years. County executed an option contract granting Ds the exclusive right to explore
and lease the reserve. Ds paid P $100,000. Four days after the expiration of the ninety-day
deadline in the Agreement, P and D amended the Agreement extending the ninety-day deadline
for Fuels to either pay $720,000 or release the option until December 31, 2001. Ds paid
$50,000 for the extension. The Amendment also stipulated that Ds could extend the deadline
to February 13, 2002 if Ds paid P another $50,000 by no later than December 31, 2001. On
January 4, 2002, four days after the deadline to release the option agreement expired, Ds
notified the County by letter that it would not exercise the option and also informed P of
its decision by telephone. P demanded that Ds pay it $720,000 pursuant to the Amendment's
provision which required the payment if Ds did not release the option on or before December
31, 2001. Ds refused to pay. P sued. The district court denied P's motion but granted
summary judgment in favor of Ds, finding that the clause calling for the $720,000 payment
was an unenforceable penalty. P appeals.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
Get
free access to the entire content for Mac, PC or Online
for 2-3 days and free samples
of all kinds of products.
for 2-3 days and free samples of all kinds of products.
https://bsmsphd.com
© 2007-2016 Abn Study Partner
No comments:
Post a Comment