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of core steel were generally used to manufacture transformers: M3 and M4 (which, at the time, was more expensive than M3 core steel). The manufacturer anticipated using M3 steel to produce the transformers. Shortly after contracting, demand for M3 steel increased dramatically, as did the price for it, and it became exceedingly difficult to obtain. The manufacturer could obtain M4 steel, but at a much higher price than the manufacturer anticipated at contracting. On similar facts, a federal district court held that the unexpected price increase of M3 steel did not excuse the manufacturer’s performance. None of the factors leading to the price increase for M3 steel were unforeseeable, and the seller typically bears the risk of increases in market prices. [ See Rochester Gas and Elec. Corp. v. Delta Star, Inc. , No. 06–CV–6155–CJS–MWP, 2009 WL 368508 (W.D.N.Y. 2009).] Compare : An oil producer contracted to sell fuel to a power plant over time at fixed prices. At the time, there were very few refineries capable of refining crude oil into a fuel suitable for power plants. Shortly after contracting, various state governments shut down several oil refineries, deeming them nuisances. The precious few remaining refineries suddenly had vastly more demand for refining than they had the capacity to handle, resulting in more than a sixfold increase in the cost of the fuel. On these facts, a court could find that the price increase resulted from factors unforeseeable at the time of contracting. Thus, § 2- 615 may apply to excuse the producer’s contractual performance. [ Cf. Moyer v. City of Little Falls , 510 N.Y.S.2d 813 (N.Y. Sup. Ct. 1986) (applying Article 2 by analogy; government shutdown of landfill created a monopoly, resulting in more than sixfold increase in cost of disposing of waste at landfills; court found that the price increase was unreasonable, excusing performance by contractor who won bid to dispose of waste for a city).] b. Failure of Seller’s Supply Source Generally, a partial failure of the seller’s source of supply is foreseeable and, thus, will not excuse a seller’s nonperformance without a specific contractual provision excusing nonperformance in that event. A total failure of a supply source may be somewhat more likely to excuse nonperformance, if unforeseeable. But in either case, if the seller could obtain the goods from an alternative source, albeit at significantly higher cost, she typically must do so. Section 2-615 is not, after all, meant to guarantee the seller’s profit on a transaction. Yet many courts will normally excuse a seller’s performance for a supply shortage only if (1) the contract itself designates one source as the sole source of supply, (2) the source fails, (3) the cause of the failure was unforeseeable at contracting, and (4) the seller took all due measures to avert the failure. [ See Ecology Svcs, Inc. v. GranTurk Equip., Inc. , 443 F.Supp.2d 756 (D. Md. 2006); 2 Hawkland UCC Series § 2-615:2, Westlaw (database updated June 2021).]
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