Legal Question in Business Law in New York

Re: abandonment of a valid contract

Unfortunately, I cannot answer A, B or C's questions in a simple email without asking some of my own questions regarding the facts, including a review of the documents signed in the acquisition as well as the supplier's contract.

Feel free to call me if you would like to go over those in details.

Best regards,

Peter Moulinos

Re: abandonment of a valid contract

Without having access to the termination provisions (or absence thereof) of the subject contract it is difficult to give a definite answer. However, I will also say that the manner in which C acquired A (i.e. bulk asset transfer, merger, stock purchase, etc.) will also play a central role in the scope of duties and obligations that C would stand to inherit and thus be bound by. If for example, C merely acquired A's assets, then it has strong leverage to argue that it does not have any obligations under the subject contract. Finally, with regard to damages, that too is a matter for contract review, as the subject contract may have liquidated damages provisions, and/or some other form of damages calculation. If the contract was silent as to damages, the general calculation under the UCC is the difference between the units purchased and the total number units committed to under the contract. Again, however these are very general stabs at your issue and a much fuller inquiry is probably warranted. If you have further questions or wish to see if counsel can assist you, please feel free to contact me.

Best,

Kaiser

Re: abandonment of a valid contract

Everything depends upon the contract between A and B. If B's contract with A compels A to order certain quantities and/or contains a noncompetition clause which protects B, there would be a basis to present a claim against A for the contract price and other damages. The way that you have presented the facts makes it appear that A may have merely placed orders for the substance manufactured by B with a license from B to include that substance in the final product. If this is the case, A's mere cessation of placing orders would not give rise to a cause of action. The terms of the contract will answer your question. What promise has A breached? Whatever it is that A promised (presumably, sums of money) is what can be recovered. Lost profits may be recoverable, depending upon the circumstances. An injunction may be available, also depending upon the circumstances.

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