Contracts
Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194, 179 N.E. 383 (N.Y. 1932)
Study notes for Canadian Industrial Alcohol Co. v. Dunbar Molasses Co.: professor notes, cold call prep, exam angles, and memory aids.
A seller is not excused from performing a contract if the supply source fails, unless the contract specifically limits performance to that source.
This case addresses the doctrine of impracticability in contract law, emphasizing that parties to a contract must assume the risks of supply unless explicitly stated otherwise. The ruling affirms that when a seller contracts to deliver goods without designating a specific source, they bear the risk of any supply issues that may arise. This case is pivotal for understanding the obligations and risks inherent in contract performance, especially in scenarios involving foreseeable supply chain disruptions.
Professors will likely highlight the significance of risk allocation in contracts and encourage students to consider how language in a contract can explicitly limit or extend performance obligations. They may also urge students to critically analyze how this case fits into broader doctrines of contract law, particularly relating to the definition of impracticability and the expectations of parties under commercial contracts.
Risk assumed unless specified otherwise.
| Case | Distinction |
|---|---|
| Taylor v. Caldwell | In Taylor, the contract included an implied condition that the subject matter (music hall) must exist, leading to excusal from performance due to impossibility, unlike Dunbar where no specific supply source was designated. |
| United States v. Winstar Corp. | Winstar involved government contracts that were deemed impossible due to government action, contrasting with Dunbar where the seller bore the risk of supply albeit unforeseeable. |
Allowing sellers to be held to contracts promotes accountability and encourages careful risk assessment and negotiation in business transactions.
Stricter liability on sellers for supply issues may discourage their willingness to contract and increase costs due to burdens placed on them for unforeseeable supply chain disruptions.
Expect exam questions that require application of the impracticability doctrine, specifically how risk allocation in contracts can affect outcomes. Questions may focus on distinguishing between 'specific source' limitations versus general procurement obligations.