Sales and Leases | 176
Compare : A coal distributor contracted to sell specified quantities of coal to a power company at fixed prices. The contract stated that Mine A would be the ”primary source“ for the coal, but the contract did not designate Mine A as the sole source. Indeed, in performing the contract, the distributor supplied coal obtained from at least eight sources other than Mine A. But when Mine A shut down, the distributor sought to excuse further performance under § 2-615. Here, § 2-615 likely does not apply. ”Primary“ does not mean ”sole,” and the parties’ course of performance indicated that the distributor could obtain coal from sources other than Mine A, which it in fact did multiple times. [ See Gulf Power Co. v. Coalsales II, LLC , 522 Fed.Appx. 699 (11th Cir. 2013).] 4. Force-Majeure Clauses Perhaps owing somewhat to § 2-615’s relative uncertainty of application, when parties seek to deal with unforeseen contingencies, they often do so by including a so-called force-majeure clause in their contract. The term force majeure means ”a superior force.” To that end, a force-majeure clause is a “contractual provision allocating the risk of loss if performance becomes impossible or impracticable, [especially] as a result of an event or effect that the parties could not have anticipated or controlled.” [ Force majeure, force-majeure clause, Black’s Law Dictionary (11th ed. 2019).] These clauses often list examples of events discharging performance, such as acts of God, labor strikes, natural disasters, embargoes, terrorism, vandalism, and so on. Some courts have held that, for a force-majeure clause to excuse performance, (1) the specific contingency that occurred must be listed in the clause and (2) the contingency must have been unforeseeable. [ See Rochester Gas and Elec. Corp. v. Delta Star, Inc. , No. 06–CV–6155–CJS–MWP, 2009 WL 368508 (W.D.N.Y. Feb. 13, 2009).] 5. Impracticability Only Partially Affecting Seller’s Ability to Perform Special rules apply if the impracticability only partially affects the seller’s ability to perform. Here, the seller must allocate both delivery and production among her various customers. At the seller’s option, she may include (1) regular customers, even those who are not under contract at the time, and (2) the seller’s own future-manufacture requirements. The seller may implement the allocation in any manner, provided the manner is fair and reasonable. [U.C.C. § 2-615(b) (1951).] a. Reasonably and Fairly Allocating Production and Delivery In allocating production and delivery, the seller must exercise good faith. In addition, as a general rule, the seller should prefer her contract customers and regular customers and, regardless of price, allocate evenly among them. Indeed, the Sixth Circuit has held that any allocation is unreasonable if it includes any participants other than regular customers or customers under contract. In that vein, allocations predicated purely on the seller’s own
Made with FlippingBook - Online Brochure Maker