Transatlantic Financing Corp. v. United States
363 F.2d 312
Facts:
-Plaintiff contracted with defendant to deliver a cargo of wheat from Texas to Iran via the Suez Canal. When the Suez was closed, the contract became impossible to perform. Plaintiff argued that when it delivered the cargo by going around the Cape of Good Hope, it conferred a benefit upon defendant for which it should have been paid in quantum meruit.
-The court held that plaintiff was entitled to only the contract price for transporting the cargo because performance of the contract was not rendered legally impossible by the canal’s closure. Instead, plaintiff attempted to take its profit on the contract and then force defendant to absorb the cost of the additional voyage.
-When impracticability without fault occurs, the law seeks an equitable solution. There was no interest in casting the entire burden of commercial disaster on defendant in order to preserve plaintiff’s profit.
Procedural History:
-Plaintiff, a shipping corporation, appealed from an order of the United States District Court, dismissing plaintiff’s action to recover from defendant government the costs attributable to diverting plaintiff’s ship from the normal sea route caused by the closing of the Suez Canal.
Rules:
-When the issue of impossibility of performance is raised, the court is asked to construct a condition of performance based on the changed circumstances, a process that involves at least three reasonably definable steps.
-First, a contingency (something unexpected) must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable. Unless the court finds these three requirements satisfied, the plea of impossibility must fail.
Analysis:
-The doctrine of impossibility of performance has gradually been freed from the earlier fictional and unrealistic strictures of such tests as the implied term and the parties contemplation. It is now recognized that a thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.
Conclusion:
The court affirmed the judgment for defendant because plaintiff was entitled to only the contract price for transporting cargo of wheat from Texas to Iran via the customary route, the Suez Canal, because performance of the contract was not rendered legally impossible by the canal’s closure.
363 F.2d 312
Facts:
-Plaintiff contracted with defendant to deliver a cargo of wheat from Texas to Iran via the Suez Canal. When the Suez was closed, the contract became impossible to perform. Plaintiff argued that when it delivered the cargo by going around the Cape of Good Hope, it conferred a benefit upon defendant for which it should have been paid in quantum meruit.
-The court held that plaintiff was entitled to only the contract price for transporting the cargo because performance of the contract was not rendered legally impossible by the canal’s closure. Instead, plaintiff attempted to take its profit on the contract and then force defendant to absorb the cost of the additional voyage.
-When impracticability without fault occurs, the law seeks an equitable solution. There was no interest in casting the entire burden of commercial disaster on defendant in order to preserve plaintiff’s profit.
Procedural History:
-Plaintiff, a shipping corporation, appealed from an order of the United States District Court, dismissing plaintiff’s action to recover from defendant government the costs attributable to diverting plaintiff’s ship from the normal sea route caused by the closing of the Suez Canal.
Rules:
-When the issue of impossibility of performance is raised, the court is asked to construct a condition of performance based on the changed circumstances, a process that involves at least three reasonably definable steps.
-First, a contingency (something unexpected) must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable. Unless the court finds these three requirements satisfied, the plea of impossibility must fail.
Analysis:
-The doctrine of impossibility of performance has gradually been freed from the earlier fictional and unrealistic strictures of such tests as the implied term and the parties contemplation. It is now recognized that a thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.
Conclusion:
The court affirmed the judgment for defendant because plaintiff was entitled to only the contract price for transporting cargo of wheat from Texas to Iran via the customary route, the Suez Canal, because performance of the contract was not rendered legally impossible by the canal’s closure.
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