Contracts II

Klein v. PepsiCo, Inc.

United States Court of Appeals for the Fourth Circuit, 1988

Facts:

Plaintiff, wanting a used jet, had defendant UJS arrange the purchase of one. UJS agreed to buy a jet from defendant PepsiCo for $4.6 million and gave a $100,000 down payment. UJS agreed to sell it to plaintiff for $4.75 million. At the pre-purchase inspection, plaintiff's agent noticed some cracks on the turbine blades, and PepsiCo agreed to pay for the repairs. A couple days later, PepsiCo withdrew from the deal.

Procedural History:

Trial court found that a contract had been formed and ordered specific performance of the contract because the plane was unique and plaintiff could not cover with a comparable aircraft.

Issue:

If a contract was formed, was specific performance appropriate?

Rules:

Reasoning:

  • The trial court found that a contract was formed and PepsiCo offers no reasons why this was clearly erroneous.

  • Plaintiff wanted the plane to resell himself. As the trial court stated, money damages would have made him whole. There were also three comparable planes on the market at the time. Plaintiff even bid on two of them after the deal with defendants fell through. The fact that their price began to increase afterwards is not enough to order specific performance. Because money damages would be adequate and the aircraft is not unique, specific performance should not be granted.

Holding:

No, while a contract was formed, specific performance was inappropriate. Affirmed in part; reversed in part.

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