1. What point does the court make about the level of defects in the product?

2. Can a party to a contract use the right to demand assurances after the party is already in breach?

3. What additional information would need to be included in a demand for adequate performance?

On April 1, 2004, Advanced Body Care Solutions, LLC (“Advanced”) and Thione International, Inc. (“Thione”), entered into an agreement that required Advanced to make minimum purchases of “Thione Antioxidant Complex,” which reduces free radical damage to the body, and Thione’s “Free Radical Monitor Test Kit,” which is a test kit for at-home use to monitor the body’s free radicals.Ampoules are small glass tubes that contain a clear liquid reagent, which tests for the presence of free radicals in a urine sample.

In exchange, Advanced received “the license and authority” “to advertise, promote, market, sell and otherwise distribute” the Dietary Supplement and the Test Kit on an exclusive basis. The agreement was to remain in effect for a minimum of five years: April 1, 2004 to March 31, 2009. On May 26, 2004, Advanced placed an order for 25,000 ampoules, for which it paid $41,250. It received about 20,000 ampoules on September 1. It was immediately apparent that 200 to 300 of the 20,000 were broken, and about 1,000 were pink, indicating that they were defective.

The following day, Dr. Stephen Perry, Advanced’s liaison with Thione, sent an e-mail to Dr. Mark Hersh, the CEO and chief scientist of Thione, stating that, “Carl [Pradelli, Advanced’s managing member,] received some vials that are pink,” and inquiring, “Do we have a production issue?” As of March 2005, Thione had not yet identified the source of the problem with the first shipment of 20,000 ampoules, and Advanced had placed no subsequent orders. On March 18, Pradelli sent Hersh a summary of Advanced’s marketing efforts. Following five pages on that subject was a section of the letter entitled “The Lingering Black Cloud” that stressed that Advanced’s “biggest concern” was the defective ampoules and that it could not launch any additional marketing initiatives until satisfied that the problem was permanently solved.

During the summer of 2006, Advanced and Thione attempted to renegotiate the Licensing Agreement. The renegotiation efforts failed.

On September 26, 2006, Advanced filed suit against Thione for damages, claiming that Thione had breached the Licensing Agreement and an implied warranty by providing Advanced with defective ampoules. Thione counterclaimed for breach of the Agreement by Advanced of its minimum purchase obligations and claiming lost profits. The district court entered judgment for Thione for $2.5 million and denied the purchaser’s post-judgment motions. Advanced appealed.

JUDICIAL OPINION

TJOFLAT, Circuit Judge … Advanced argues that the jury lacked a legally sufficient evidentiary basis for finding for Thione on Advanced’s breach of contract claim and for Thione on its breach of contract counterclaim for two reasons: (1) Thione’s ……………………..