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Sun Ship, Inc. Case Summary

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In the case of California and Hawaiian Sugar Company v. Sun Ship, Inc., 794 F.2d 1433, Web 1986 U.S. App. Lexis 27376 (1986), it was concluded Sun Ship Inc. was in violation of its contract with California and Hawaiian Sugar Company (C&H) and ought to compensate the agreed amount detailed in the liquidated damages clause. C&H contracted Sun Ship to build a ship and be delivered upon an agreed date. Sun Ship did not meet the suspense that was outlined in the contract with C&H and drove them to pursue another shipping alternative. C&H did suffer damages of $368,000 and pursued damages from Sun Ship who refused to pay. C&H filed a lawsuit for payment of amount owed under the liquidated damages clause in the amount of $4,413,000 (Cheeseman, 2013). …show more content…
In order to file a suit against these types of clauses one must consider if a company could have gained and lost any funds. Companies should be careful not to appear greedy when filing suit over liquidated damages. In the event that a company is reluctant to pay for damages caused by their failure to meet contractual obligation, liquidated damages should be considered. If a construction company has been contracted to provide excavation equipment to a mine site, that may produce diamonds and fails to deliver the product on time, they are in breach of contract. The mining company could also file suit due to not being able to start on time, and claim costs or damages because of the delay. A time not to peruse liquidated damages is when the claim will cause more harm than good. If the violation of a liquidated damages clause were to put a company out of business and the delay did not create any hardship on the other company it would not be wise to pursue it. Liquidated damages clauses provide companies the protection they need when the cost of one party’s failures are countless. To file suit for a violation of the clause should be made in an ethical manner and not as an attempt to make a profit when no real damages were

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