BUSI 2001 Week 9 Opposing Argument and Response Example

Stating the Supplier's Best Defense Before Answering It: Commercial Impracticability and a Force Majeure Clause Raised Against a Distributor's Claim That Forty Freezers Were Never Delivered, and Why the Breach Conclusion Still Holds

Student Name

Walden University

BUSI 2001: Business Law

Instructor Name

Month Day, Year

Stating the Supplier's Best Defense Before Answering It: Commercial Impracticability and a Force Majeure Clause Raised Against a Distributor's Claim That Forty Freezers Were Never Delivered, and Why the Breach Conclusion Still Holds

The Position Already Taken

Earlier in the term I concluded that a freezer manufacturer breached its contract with Prairie Valley Supply, the composite Omaha distributor, when it failed to deliver forty commercial freezers by the agreed date of September 30, 2027. Freezers are goods, so the Code's sales article controlled the contract, the delivery date was firm, and the manufacturer delivered nothing. Prairie Valley had pre-sold most of the freezers to restaurants opening in the fall and had to buy substitutes from another source at a higher price.

The Opposing Position at Full Strength

The manufacturer's best argument runs as follows. Its performance was excused because a worldwide shortage of the compressors used in commercial freezers made delivery impracticable. Article 2 provides that a seller's delay or failure to deliver is not a breach when performance has become impracticable because of a contingency whose non-occurrence was a basic assumption on which the contract was made, provided the seller notifies the buyer and, where it can supply some goods, allocates its supply fairly among its customers. The common law of contracts recognizes the same excuse (American Law Institute, 1981). When the contract was signed in April 2027, neither party expected that the sole supplier of a key compressor would halt production after a plant fire in June.

The manufacturer can add a contract argument. The agreement contains a force majeure clause excusing delay caused by "fire, flood, acts of government, labor disputes, shortages of materials or other causes beyond the seller's reasonable control." A shortage of compressors is, on its face, a "shortage of materials." Courts generally enforce such clauses as written between businesses, and Mallor et al. (2022) note that parties are free to allocate the risk of supply interruptions by contract.

Finally, the manufacturer can point to its notice. In August it emailed all dealers that deliveries "may be delayed due to industry-wide component constraints," which, it will argue, gave Prairie Valley time to find other sources.

This is a serious position. If the force majeure clause applies, Prairie Valley may have no claim at all.

The Answer

The answer begins with what the defense must prove. Impracticability is a narrow excuse. Courts have refused it where the event was foreseeable or where performance merely became more expensive. In a well-known case, a shipper that had to sail around Africa after the Suez Canal closed was not excused, because the longer route was still possible and the risk of closure was foreseeable when the contract was made (Transatlantic Financing Corp. v. United States, 1966). Here, compressor shortages had been widely reported since early 2027, before the contract was signed, and the manufacturer could have bought compressors from a second supplier at a higher price. Higher cost is not impracticability.

Second, even if the shortage counts as an excusing event, Article 2 requires a seller with partial supply to allocate it fairly among customers. Prairie Valley later learned that the manufacturer delivered freezers in September to two large national chains. A seller that fills its largest customers' orders and none of a small distributor's has not allocated fairly, and the excuse does not cover that choice.

Third, the force majeure clause is the strongest point, and I concede it may excuse some delay. But such clauses are read in light of their purpose, and courts usually require that the listed event actually caused the non-performance. The manufacturer's deliveries to other customers show it had freezers; its failure to deliver to Prairie Valley was a result of how it chose to allocate them, not of the shortage alone. The clause also excuses delay, not permanent non-delivery, and the manufacturer has not delivered at all.

Fourth, the August email was not adequate notice. It said deliveries "may be delayed," without saying that Prairie Valley's order would not be filled or when it might be.

Evidence the Distributor Should Gather

The answer depends on facts that Prairie Valley can document now, and it should do so before writing to the manufacturer. It should collect the industry reports of compressor shortages published before April 2027, which show the risk was foreseeable when the contract was signed. It should ask the restaurants that bought from the national chains when their freezers arrived, which would show the manufacturer had units in September. It should keep the August email and every later message, since the adequacy of notice will be judged from their exact words. And it should keep the invoices for the substitute freezers, because the measure of damages for a seller's failure to deliver is usually the difference between the contract price and the cost of reasonable substitute goods.

What a Fair Outcome Might Look Like

Litigation over forty freezers would cost both sides more than the dispute is worth. A realistic resolution is for the manufacturer to pay the difference between the contract price and what Prairie Valley paid for substitutes, perhaps reduced by an amount reflecting a reasonable period of excused delay. Presenting that figure with the evidence above gives the manufacturer a reason to settle rather than defend a force majeure argument that its own deliveries to other customers undermine.

Where the Conclusion Stands

The conclusion holds, with one qualification. The manufacturer breached by failing to deliver, because the shortage was foreseeable, supply was not allocated fairly and the force majeure clause does not cover a seller's own choices. The qualification is that a court could read the clause as excusing a reasonable delay, which would limit Prairie Valley's damages to the period after a reasonable delivery date had passed. The distributor's claim for the extra cost of substitute freezers should be measured with that possibility in mind.

References

American Law Institute. (1981). Restatement (second) of contracts.

Mallor, J. P., Barnes, A. J., Bowers, L. T., & Langvardt, A. W. (2022). Business law: The ethical, global, and e-commerce environment (18th ed.). McGraw Hill.

Transatlantic Financing Corp. v. United States, 363 F.2d 312 (1966).