Canadian Industrial v. Dunbar Molasses

Canadian Industrial Alcohol Co. ("Canadian Industrial" / "Canadian" has been merged into http://www.corby.ca/ as of 2023) contracted to buy 1,500,000 gallons of molasses (sugar) from Dunbar Molasses Co. ("Dunbar Molasses" / "Dunbar") to be sourced from the refinery in Yonkers, New York.

Dunbar's molasses shipments to Canadian were to begin after April 1st 1928.

Dunbar shipped over 344,000 gallons of molasses but then stopped! Dunbar was basically out of additional molasses to satisfy the 1.5 million gallons of ordered molasses (sugar).

Canadian sued Dunbar for money damages.

Canadian won a jury court trial.

What if the seller is out of stock?

Is a contracted seller that counts on the continuation of special circumstances to meet its contractual obligations released from performance when those circumstances end?

Dunbar argued that is duty to deliver sugar was constrained by the refinery's supply of sugar (molasses).

No. A contracted seller that counts on the continuation of special circumstances to meet its contractual obligations isn't released from performance when those circumstances end.

Affirmed

Benjamin Cardozo: If there is an agreed implied condition of performance, then it may be excused by the failure of those circumstances (implied condition).

Likewise, a catastrophic event may also excuse the seller from performance on the basis of impossibility.

Dunbar was at fault according to the judges because Dunbar didn't arrange with the refinery to ensure that the refinery wouldn't cease production of molasses (sugar).

• Contracts_Ayres/9th_ed._Outline#F._Excuses_from_Performance_.28Impracticability_.2F_Frustration.29