An Analysis On A Case Of A Company Sues B Company

In contract disputes cases it is the core issue to maintain the subject to liabilityfor liquidated damages, such is the case of A Company charging B Company withdefault. Firstly, it is the basic problem of the case whether circumstance alteration canbe applied. The price of subject matter to the contract, red copper bars, tends to hikeafter both parties signed the Purchase and Sales Contract, which goes beyond ACompany’s anticipation and business risk in general sense. So to proceed withperformance of the Contract will bring a obviously unfair result to A Company, andfrustrate the purpose of the contract. Therefore, circumstance alteration can beapplied to the case. Secondly, in accordance with the verdict by court of first andsecond instance that circumstance alteration can’t be applied to the case, on the basisof the principle of full compensation, in view of the practical situation, scope ofdamage compensation by B Company to A Company should be maintained accordingto the predictability rules, misconduct offset principle, the principle of the profit andloss offset and the rules of mitigation of damage. Much attention should be paid toobservant party’s responsibility in mitigation. If observant party is responsible forexpansion of losses, delinquent party’s responsibility should diminish accordingly.Thirdly, in respect that A Company purchases red copper bar for processing andreselling, after B Company’s default, A Company has to subpurchase raw material.Subpurchase price has an influence on the amount of damage on subpurchase lossespaid to A Company by B Company, so whether the subpurchase price is reasonable isone of focus of disputes in the case. As to maintaining subpurchase price, in order toget a fair amount of damage compensation, default time, subpurchase time and supplyin raw material market should be taken into consideration. Meanwhile, it is proposedthat in the sales contract regard to the active subject matter of relatively large pricefluctuation price change clauses should be stipulated for the avoidance of disputes.