This section contains the nature of the case and procedural background.

Empire Gas (P) was a retail distributor of liquefied petroleum gas, known as propane. P also sells converters to enable gasoline-powered vehicles to operate on propane. The sharp rise in gas prices in 1979-80 made American Bakeries (D) which operated a fleet of over 3,000 trucks interested in the possibility of converting its fleet to propane which was then 1/3rd to ½ less expensive than gasoline. Discussions between P and D resulted in an agreement in principle. P sent D a draft of its standard Guaranteed Fuel Supply Contract, which would have required D to install a minimum number of conversion units each month and to buy all the propane for those vehicles from P for eight years. D rejected that contract and P prepared a new one. The new document was executed on April 17, 1980, and was for approximately 3,000 units depending on the requirements of the Buyer for a price of $750 per unit. D agreed to purchase fuel solely from P when P has supplied carburetion and dispensing equipment as long as P remains in a reasonably competitive price posture with other major suppliers. The contract was to last for four years. D never ordered any equipment or propane from P. Within days after signing the contract, D decided not to convert its fleet. No reason is given for that decision. P sued D for breach of contract. P got a jury verdict of $3,254,963 for lost profits on 2,242 conversion units and the propane fuel those units would have used had they been installed. The judge added $581,196 in prejudgment interest. D appealed.

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