Question

Wright Engineering and NG Energy, both Fortune 500 companies, entered into a contract whereby Wright agreed to install a new drilling system for NGE's natural gas operations in eastern Ohio. A clause in the contract states that Wright will not be liable for damages caused by the negligent installation of the system, except that Wright warrants the system and will fix any problem for a period of two years following installation. Wright completes the installation of the system, and NGE begins drilling. Six months later, the system suffers a catastrophic failure because of Wright's ordinary negligence and closes off NGE's ability to access its natural gas supplies for six months. Wright fixes the system, but NGE suffers significant lost profits during the time that drilling was shut down. NGE sues for the lost profits. Who wins?

A. Wright Engineering
B. NG Energy
C. Both parties share liability
D. The court determines liability based on market conditions.

Answer 1

NG Energy (NGE) would likely win the lawsuit against Wright Engineering because the catastrophic failure of the drilling system due to Wright's negligence falls under the warranty clause.The correct answer is option A.

Step-by-step explanation:

In this case, NG Energy (NGE) would likely win the lawsuit against Wright Engineering.

Although the contract between the two companies includes a clause stating that Wright will not be liable for damages caused by negligent installation, it also includes a warranty from Wright to fix any problems with the system for a period of two years.

The catastrophic failure of the drilling system due to Wright's negligence falls under the warranty clause, and since NGE suffered significant lost profits as a result, they would have a valid claim for compensation.The correct answer is option A.