Law School Case Brief
CKB & Assocs., Inc. v. Moore McCormack Petroleum, Inc. - 809 S.W.2d 577 (Tex. App. 1991)
To be enforceable, a best efforts contract must set some kind of goal or guideline against which best efforts may be measured. A contracting party that performs within the guidelines fulfills the contract regardless of the quality of its efforts. When a party misses the guidelines, courts measure the quality of its efforts by the circumstances of the case, and by comparing the party's performance with that of an average, prudent, comparable operator.
On January 8, 1990, the trial court entered final summary judgment for appellee Moore McCormack Petroleum (MMP) on its breach of contract claim and awarded damages of $ 7,190,125, reduced by credits and offsets totalling $ 6,251,060. The trial court ordered appellant CKB & Associates, Inc. (CKB) to pay a balance of $ 939,064, plus interest and attorneys' fees. CKB and MMP both appeal from the trial court's judgment. CKB argues that it did not breach its contract with MMP, that if it did breach the contract, then fact issues exist as to the proper measure of damages. CKB also argues that the trial court used an erroneous legal standard in determining damages. MMP complains that CKB is not entitled to offsets against its claim and that the trial court erred in determining the proper amount of prejudgment interest to which MMP is entitled. MMP also contests each of CKB's points of error.
Did CKB breach its contract with MMP?
The Court of Appeals of Texas agreed with the trial judge's ruling that appellant CKB's performance was inadequate, given undisputed evidence that jet fuel production could easily have been increased. It also upheld the trial judge's calculation of damages, deeming them to have been adequately proven and reasonably foreseeable, and the calculation of an offset for appellant due to its overproduction of lesser petroleum products. However, the Court modified the judge's calculation of prejudgment interest, finding that interest should have been calculated from the date of MMP's demand letter and should have been compounded daily. The summary judgment was affirmed in all respects save one. There was evidence establishing that CKB did not employ the requisite best efforts and that CKB was entitled to an offset for other efforts made by it, but the prejudgment interest calculation was erroneous.
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