Pacific Oil Company

In this case, Pacific Oil Company had established a working relationship with Relient Company to supply the former with vinyl chloride monomer (VCM). The business relationship was on a contractual basis and had begun in 2006 and was coming to a close in December, 2009. However, both firms realized that they had both greatly benefitted from the relationship, and Pacific Oil thought it wise to approach Relient with a proposal to extend the business beyond the expiration of the contract. They thought that they could do this on different terms especially in terms of the price due to the worldwide shortage of VCM, however, the rest of the terms like delivery and the words used in the contract forms would stay put. Relient agreed to this and the contract was extended.

However, Pacific Oil later experienced several threats as several companies had expressed a desire to start the manufacturing of the VCM. They felt that this could have a huge effect on the prices due to presence of competitors. They felt the need to-re-open negotiations with Relient as they had proven to be very reliable clients. A proposal for Pacific Oil to use VCM in production of PVC products also necessitated these talks. This necessitated several negotiations in which both parties were supposed to table their concerns and where they both could come up with suitable solutions to existing problems. Pacific Oil’s main concern was the fluctuating costs which would have lured Relient into buying the product from a favorable supplier.