Iron Trade Products Co. v. Wilkoff Co.

Supreme Court of Pennsylvania · 1922 · Contracts

Contractsanticipatory repudiationdamagescovermitigationnondeliveryavailable marketmarket price damages

Facts

In July 1919, plaintiff contracted to buy 2,600 tons of section relaying rails from defendant at $41 per ton, with delivery in New York harbor at specified times. Defendant delivered none of the rails, and plaintiff alleged it had to buy substitute rails elsewhere at about $49 to $49.20 per ton, while the market price at the time and place of delivery was about $50 per ton. Defendant asserted that supply was very limited and that plaintiff's own purchases from suppliers with whom defendant had been negotiating reduced available supply and raised prices, making defendant's performance impossible. Defendant also alleged plaintiff had resold the rails at $42.25 per ton and had later been released by its own buyer from liability.

Issue

Whether defendant's nonperformance was excused because plaintiff's own purchases made performance more difficult or expensive, and whether plaintiff's damages were limited by its resale contract or release by its subbuyer. Also at issue was whether the pleadings sufficiently denied the existence of a market price.

Rule

A contracting party is excused for nonperformance when the other party's conduct prevents performance, but not when that conduct merely makes performance more difficult or expensive. Mere difficulty of performance is no excuse for breach. In a buyer's action for nondelivery where there is an available market, damages are generally the difference between the contract price and the market price at the time and place of delivery; if the buyer actually procures substitute goods at less than market, recovery is limited to the amount actually paid above the contract price. A buyer's prior resale of the goods is irrelevant to damages unless made part of the original contract.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lena Ortiz, a contractor in Chicago, agreed to buy 500 specialty copper coils from Prairie Metal Supply, with delivery in Milwaukee over the next month. Before delivery, Lena also bought similar coils from other dealers in Cleveland and Detroit, which tightened supply and drove up prices, but coils remained available in the market.

If Prairie Metal refuses to deliver, claiming Lena's purchases made performance impossible, which is the best result?

Explanation. The governing rule is that a party is excused when the other party actually prevents performance, not when the other party merely makes performance more difficult or costly. Here, Lena's other purchases tightened the market but did not prevent performance, especially because supply still existed. Mere difficulty of performance is no excuse for breach. (Derived from Iron Trade Products Co. v. Wilkoff Co. (1922).)