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Perished goods & Frustration of contract

Key Concepts:

Terms in this set (11)

Where only part of the goods have perished then the seller might be required to make the remaining (unperished) goods available to the buyer although the buyer will not be under any obligation to accept them.

Where a buyer contracts with a seller to purchase a specific portion of a crop, and performance becomes impossible owing to a failure of the crop w/o any default on the part of the seller, then the seller is not liable to the buyer in damages although he is obliged to deliver the actual amount that has been harvested.

It is more useful to the buyer to point to an implied term to resolve his case since this allows for the possibility of requiring the seller to deliver, rather than using the doctrine of frustration where if the contract were frustrated, the obligation of the seller to deliver anything will be removed.

It is reasonable to expect that such performance as is possible should be carried out by the seller if the subject of sale suffers only some deterioration.

(Seller contracted with B before harvest to sell his entire crop of barley (about 270 tons) but due to bad weather the crop yielded far less (140 tons) than the estimate the contract was based. S then sold a majority of his crop to another buyer, and sold the rest to B at a higher price than agreed upon. However, an implied condition of the contract that if a lower tonnage of crop was produced through no fault of S, S will not pay damages, as agriculture involves significant risk. B sued for breach of contract. Issue: Does the crop shortfall absolve Street of his contractual obligation to deliver? Held: It was an implied condition of the contract that if a lower tonnage of crop was produced through no fault of the S, he should not pay damages. It is unreasonable, however, to conclude the implication that if the seller could not deliver the whole obligation he should not deliver any of it (ending the contract). The stipulated tonnage was an upper limit; it cannot be implied as a lower limit to release the seller from his obligation. It seems reasonable to assume that the parties are likely to have agreed that on the facts that arose in that case the buyer should have the option of accepting the reduced quantity of barley that was, in fact, harvested.