Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 20

Obligations of the Seller Flint Hills Resources, LP, a refiner of crude oil, 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. After several weeks, when 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 of contract. Did Flint Hills have a right to demand assurance of JAG's title to its product? If so, did Flint Hills act reasonably in exercising that right? Explain. [ Flint Hills Resources LP v. JAG Energy, Inc., 559 F.3d 373 (5th Cir. 2009)]