Briefing the CaseChapter 12 

Case: LNS INVESTMENT COMPANY, INC., v. PHILLIPS 66 COMPANY.Citation: LNS Inv. Co. v. Phillips 66 Co., 731 F. Supp. 1484 (D. Kan. 1990)Court of Decision: United States District Court, D. Kansas. 

Date Decided: February 23rd, 1990

 Parties: Plaintiff LNS INVESTMENT CO., INC. Defendant PHILLIPS 66 CO. 

Facts: Plaintiff LNS Investment Co. Inc was the successor to CBC, a company that blended,labeled, and packaged quart bottles of motor oil including for Phillips 66 Co. In July of 1986Phillips sent a letter to LNS confirming a verbal agreement that LNS would provide to Phillips66 up to 4 million quarts of oil by December 31st, 1986 and that additional equipment would beneeded for the production. Despite the agreement, LNS had marked difficulty with productionand Phillips 66 repeatedly was unsatisfied with the quality of the oil quarts produced. Letters ofdissatisfaction and reason were exchanged and Phillips 66 Co made LNS aware they would notbe renewing any agreements due to the poor quality of production. LNS filed suit against Phillips66 CO for not purchasing the full output of production through December 31st, 1986 citing theJuly 1986 agreement.

 Issue Statement: Did the Plaintiff breach the contract by failing to produce the quantity andquality required within the contract?

 Rule of Law or Legal Principle Applied: Kan. Stat. Ann. 84-2-201 (West) Kan. Stat. Ann. 84-2-208 (West) Kan. Stat. Ann. 84-2-209 (West) Kan. Stat. Ann. 84-2-609 (West) 

Analysis: The court found that the contract was subject to the statute of frauds as provided inKan. Stat. Ann. 84-2-201 because it involved the sale of goods priced above $500.00 or more.The court found that the defendant did not waive the contractual requirements that plaintiffsproduction be on an even and weekly basis pursuant to Kan. Stat. Ann. 84-2-208 (West) andKan. Stat. Ann. 84-2-209 (West). The court also found that according to Section 842609,Plaintiff’s failure to provide either the quantity or quality of goods contemplated by the July 29agreement entitled defendant to suspend its performance. LNS Inv. Co. v. Phillips 66 Co., 731F. Supp. 1484, 1487 (D. Kan. 1990). Finally, the court found circumstances were sufficient to establish defendant’s right to adequate assurance of plaintiff’s future performance under K.S.A.842609 and that the plaintiff failed to provide adequate assurance.

 Conclusion: Judgment was entered in favor of defendant on plaintiff’s breach of contract claimand plaintiff’s motions to strike was denied.