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

United States Court of Appeals for the Ninth Circuit
664 F.2d 772 (9th Cir. 1981)



Nanakuli Paving & Rock Co. (plaintiff) entered a contract with Shell Oil Co. (defendant) to supply asphalt to Nanakuli. The contract set the price as the price posted by Shell at the time of delivery. For several years Shell maintained the initial price for Nanakuli. Shell later increased the price in a letter giving Nanakuli one-day notice of the change. Nanakuli brought a breach of contract suit, claiming that the contract contained an implied price-protection requirement, which was a customary trade practice in the Hawaiian asphalt industry. Shell countered that no such customary trade practice existed and that the contract terms controlled the price. Nanakuli argued that even if price protection was not a term of the contract, Shell did not exercise good faith by giving only a one-day notice of the price increase. The jury ruled in favor of Nanakuli. The jury found that Shell breached the contract by failing to offer price protection. The jury also found that Shell did not exercise good faith due to its failure to provide advance notice of the new price. Shell filed a motion notwithstanding the verdict, and the district court set aside the verdict. Nanakuli appealed.

Rule of Law


Holding and Reasoning (Hoffman, J.)

Concurrence (Kennedy, J.)

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