Case Citation
Legal Case Name

Nanakuli Paving & Rock Co. v. Shell Oil Co. Case Brief

Court of Appeals for the Ninth Circuit1981Docket #66191080
664 F.2d 772 32 U.C.C. Rep. Serv. (West) 1025 1981 U.S. App. LEXIS 15022

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Case Brief Summary & Legal Analysis

General Brief
4 min read

tl;dr: A paving company sued its asphalt supplier for breach of contract after a massive price hike. Despite a written price term of “posted price at delivery,” the court found an implied term of “price protection” based on industry-wide trade usage and the parties’ prior course of performance.

Legal Significance: This case is a landmark in U.C.C. interpretation, demonstrating how trade usage and course of performance can supplement and qualify even seemingly unambiguous express contract terms, provided they are not a complete negation of those terms.

Nanakuli Paving & Rock Co. v. Shell Oil Co. Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

Nanakuli Paving & Rock Co. (Nanakuli), an asphaltic paving contractor, had a long-term requirements contract to purchase all its asphalt from Shell Oil Co. (Shell). The written contract specified the price as “Shell’s Posted Price at time of delivery.” In the Hawaiian asphaltic paving trade, it was a universal practice for material suppliers to “price protect” contractors. This meant holding the old price for tonnage already committed to projects when prices increased, because government contracts did not have escalation clauses. Shell itself had price protected Nanakuli on the only two prior occasions of price increases under the contract, in 1970 and 1971. In 1974, amidst the Arab oil embargo, Shell abruptly raised its asphalt price from $44 to $76 per ton with virtually no notice and refused to price protect Nanakuli for 7,200 tons of asphalt already committed to specific projects. Nanakuli sued for breach of contract, arguing that price protection was an unwritten part of their agreement based on trade usage and course of performance.

Court Holding & Legal Precedent

Issue: Under the Uniform Commercial Code, can a trade usage and course of performance establishing a practice of price protection be incorporated into a contract, even when the express written term sets the price at the seller’s posted price at the time of delivery?

Yes. The court reversed the judgment n.o.v. and reinstated the jury verdict Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat n

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Legal Issue

Under the Uniform Commercial Code, can a trade usage and course of performance establishing a practice of price protection be incorporated into a contract, even when the express written term sets the price at the seller’s posted price at the time of delivery?

Conclusion

Nanakuli is a foundational case for understanding how the U.C.C. prioritizes the Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi

Legal Rule

Under U.C.C. §§ 1-205 and 2-208, the express terms of an agreement Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint o

Legal Analysis

The Ninth Circuit's analysis centered on the U.C.C.'s liberal approach to defining Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex

Flash-to-Full Case Opinions

Flash Summary

  • Under the UCC, trade usage and course of performance can add
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatu

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