Globe Refining Co. v. Landa Cotton Oil Co.
Supreme Court
190 U.S. 540 (1903)
Landa Cotton Oil (defendant) contracted to sell ten tanks of crude oil to Globe Refining Co. (plaintiff) but then refused to perform; beyond the ordinary contract-market price differential, Globe sought special damages for the cost of sending tank cars to Landa in preparation for performance, the resulting 30-day loss of use of those tanks, lost customers and reputation from being unable to fulfill its own resale contracts made in reliance on Landa's performance, and the cost of resending its tanks elsewhere -- none of which were explicitly addressed in the parties' contract. The trial court dismissed these special-damages allegations, and Globe appealed.
Whether a breaching party may be held liable for consequential damages, such as a buyer's tank-preparation costs and lost resale contracts, that were not explicitly assumed or reasonably contemplated by the breaching party at the time the contract was formed.