Business Law 12th Edition by Roger LeRoy Miller ,Frank Cross

Exercise 9

CASE PROBLEM WITH SAMPLE ANSWER: Material Breach.
Kermit Johnson formed FB I Building Products, Inc., in Watertown, South Dakota, to sell building materials. In December 1998, FB I contracted with Superior Truss Components in Minneota, Minnesota, "to exclusively sell Superior's open-faced wall panels, floor panels, roof trusses and other miscellaneous products." In March 2000, FB I agreed to exclusively sell Component Manufacturing Co.'s building products in Colorado. Two months later, Superior learned of FB I's deal with Component and terminated its contract with FB I. That contract provided that on cancellation, "FB I will be entitled to retain the customers that they continue to sell and service with Superior products." Superior refused to honor this provision. Between the cancellation of FB I's contract and 2004, Superior made $2,327,528 in sales to FB I customers without paying a commission. FB I filed a suit in a South Dakota state court against Superior, alleging, in part, breach of contract and seeking the unpaid commissions. Superior insisted that FB I had materially breached their contract, excusing Superior from performing. In whose favor should the court rule and why? [ "FB I Building Products, Inc. v. Superior Truss Components, a Division of Banks Lumber, Inc., 2007 SD 13, 727 N.W.2d 474 (S.D. 2007)]