Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194, 179 N.E. 383 (N.Y. 1932)
Canadian Industrial Alcohol v. Dunbar Molasses is a foundational contracts case on the doctrines of impossibility and commercial impracticability, especially in supply-chain breakdowns.
Is a seller excused from performance due to impracticability when its anticipated source of supply fails, where the sales contract does not expressly or impliedly condition performance on procurement from that particular source?
A seller who undertakes to deliver goods generally assumes the risk of obtaining them and is not excused by the failure of an anticipated supplier unless the contract expressly or by clear implication conditions performance on a specific, identified source or output. Impossibility or impracticability may excuse performance when the contract is tied to a particular, destroyed, or unavailable source (e.g., the output of a named mill or a specified crop), but mere difficulty, shortage, or increased expense due to a supplier's nonperformance is insufficient to discharge a promisor who has not limited its obligation to that source.
No. The seller was not excused. Because the contract did not limit performance to a specific source of supply or make delivery contingent on that source, the seller assumed the risk of procuring the molasses and was liable for the shortfall in deliveries.
The case is a classic on risk allocation and the limits of the impossibility/impracticability defense. It teaches that courts will enforce unconditional promises notwithstanding supply-chain disruptions unless the contract explicitly (or unmistakably by implication) conditions performance on a specific source. It also foreshadows UCC § 2-615 by distinguishing genuine source-destruction cases from mere supplier defaults or market shortages. For students and practitioners, it underscores the need to draft clear force majeure clauses, source-contingency language, and allocation provisions to manage procurement risk.