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ESSAY: Critical Legal Thinking Case Study 1

Important Guidelines:

Your score will be determined using the Critical Legal Thinking Case Rubric. Please read this rubric thoroughly BEFORE attempting this assignment. You should also consult the Critical Legal Thinking “How-to” rubric and the example case in the Critical Legal Thinking Case Assignments of the Syllabus.
Your score will be determined by evaluation of your substantive content. Your analysis and solutions must be based on the principles of law, ethics, and business – not on your opinions. You MUST describe how application of the principles to the key facts support your determination of the issues, in other words, you need to show the reasoning behind your decision.
Key facts are those facts that determine if the principles of law are met. You must demonstrate that you recognize the key facts in this case. List the key facts individually. Do NOT simply repeat or retype the factual scenario.
The length of your response has no bearing on your score. There is no minimum or limit, however most responses will be between two and three substantial pages.
Your assignment must be prepared using APA format. See the Tools and Resources page for more information about APA styling.

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.

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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.



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 needs to compensate. Furthermore, the judge has to determine how much NoBugs will suffer forfeiture. The standards of good faith and fair dealings will also be evaluated by the judge.

Key Facts

Sterling Inc. has obtained microchips from its partner company NoBugs which apparently is the only that can produce chips that can meet Sterling’s desired specifications. For a long time, NoBugs has consistently provided Sterling with the microchips. On one occasion however, small imperfections in the microchips produced by NoBugs resulted in a dispute and Sterling Inc. is considering a lawsuit.


Arguments: According to legal information institute, other than damages obtained from the breach of contract, the party responsible for the violation is liable to the losses obtained under the US Federal law (Hine & Ogulluk, 2016, page 27). This implies that NoBugs is ideally supposed to be solely responsible for the loss. If it had not made faulty microchips, losses could not have been found.

Counterarguments: NoBugs may not be necessarily sued since eventualities were not part of the initial contact agreement. The best that can be done is an established out of court settlement between the two business …

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