Assignment Help | Sterling, Inc. is a manufacturer of state-of-the-art computers

Sterling, Inc. is a manufacturer of state-of-the-art computers. For the past ten years, Sterling has acquired all of its microchips from NoBugs Corporation, the only producer of chips meeting Sterling’s high specifications. The relationship has been mutually profitable. Sterling could not have built its reputation as an industry leader without NoBugs’s reliable and consistently high-quality products; Sterling’s business has enabled NoBugs to grow rapidly while providing its investors with an attractive rate of return.

Some months ago, several of Sterling’s computers exploded shortly after installation. Upon investigation, Sterling discovered that tiny imperfections in NoBugs’s microchips had aggravated a dormant design defect in the computers, causing the explosions. Analysis of the chips indicated that they were indeed below specifications and that the imperfections were caused by a slight miscalibration of NoBugs’s encoding equipment. NoBugs recalibrated the equipment and promptly resumed production of perfect chips.

Sterling’s losses from the explosions – lost profits, out-of-pocket costs associated with compensating customers for the explosions, and injury to business reputation – are estimated to exceed $20 million. Sterling and NoBugs disagree on the amount of the loss for which NoBugs should be responsible. Sterling has a strong legal case for breach of contract against NoBugs. Sterling’s CEO is considering a lawsuit. She asks you to prepare a report discussing litigation strategy and the advantages and disadvantages of litigation; and discussing pretrial planning should the company opt for litigation.

MODEL ANSWER

Abstract

Adhering to contracts that are legally binding is a fundamental requirement to the parties involved. Supplying products that are not perfect can cause a negative implication on the reputation of such a company as well as result to unimaginable losses. In any case, materials have to be counterchecked before delivery, failure to which it will be a case of negligence. Two business partners can have strained relationships in such like events.

Critical Legal Thinking Case Study 1

Areas and Principle of law The areas of law involve a breach of contract. Even though there is a binding agreement between Sterling and NoBugs, the latter has shown non-performance. If one party fails to meet its contractual obligations fully, there exists a breach of contract which is a civil wrong. In civil law, this material breach allows the aggrieved party to either opt to compel performance or opt to collect damages resulting from the breach. It is the role of the judge to determine whether there is material breach by considering how far the aggrieved party (Sterling) will be deprived of benefits such as losses already stipulated as well as how far their other party….