Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 6

Case Problem with Sample Answer Flint Hills Resources, Li; a crude oil refiner, agreed to buy "approximately 1,000 barrels per day" of Mexican natural gas condensate from JAG Energy Inc., an oil broker. Four months into the contract, Pemex, the only authorized seller of freshly extracted Mexican condensate, warned Flint Hills that some companies might be selling stolen Mexican condensate. Fearing potential criminal liability, Flint Hills refused to accept more deliveries from JAG without proof of the title to its product. JAG promised to forward documents showing its chain of title. When, after several weeks, JAG did not produce the documents, Flint Hills canceled their agreement. JAG filed a suit in a federal district court against Flint Hills, alleging breach. Did Flint Hills have a right to demand assurance of JAG's title to its product? If so, did the buyer act reasonably in exercising that right? Explain. [ Flint Hills Resources , LP v. JAG Energy , Inc., 559 F3d 373 (5th Cir. 2009)]