Contract liability affirmed, $6 million damage award remanded

In Westlake Petrochemicals v. United Polychem, the plaintiff obtained judgment for $6.3 million under the UCC for breach of a contract to supply ethylene.  No. 10-20634 (July 24, 2012).  The Fifth Circuit affirmed on liability, finding that evidence about the need for credit approval did not disprove contract formation, defeat the Statute of Frauds, or establish a condition precedent.  Id. at 9-13.  The Court reversed and remanded on damages, finding that the plaintiff was analogous to a “jobber” and thus could recover lost profits but not the contract-market price differential.  Id. at 17 (citing Nobs Chemical v. Koppers Co., 616 F.2d 212 (5th Cir. 1980)).  The Court also reversed as to an individual’s guaranty of the damages, finding a conflict between the termination provision of the guaranty and the plaintiff’s argument about when liability accrued, which created an ambiguity that made the guaranty unenforceable under Texas law.  Id. at 20-21.

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