Chronister Oil Co. v. Unocal Refining And Marketing

34 F.3d 462 (7th Cir. 1994)

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Nature of the Case

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Facts

Chronister (P) made an agreement with Unocal (D) to supply 25,000 barrels of gasoline on the front seventh cycle at a fixed price of 60.4 cents per gallon. P made a contract with another trader, Enron, which in turn contracted with Crown to deliver the gas to the Colonial Pipeline as per the contract. When the gas arrived from Enron, it was found it contained too much water and Colonial refused to take it. This happened on March 5^th and D was informed the next day, but it was still within the time frame of the front seventh cycle. D called P and demanded assurances that P would comply with the contract. P called Enron which agreed to another 25,000 barrel shipment on the back seventh cycle or the eighth cycle. D was not interested and took precautions to divert gas it already owned to cover a possible breach of the contract. D called this provisional cover. Despite D’s refusal on the back seventh, P contracted with Enron for delivery on the back seventh. P offered this to D, and once again D refused. D then sold the gas to another company for 55.3 cents per gallon. P claimed that D breached the contract by its refusal to take substituted performance. P sued D for the differences in price. D countersued for breach against P claiming the difference between its inventory price of 63.14 and the 60.4 price under the contract. The district court agreed with D and P appealed.