Notes - Canadian Industrial Alcohol Co. v. Dunbar Molasses Co.

NOTE

1. The fourth paragraph of Cardozo's opinion may be taken as an accurate summary of the situations in which, under sales law as it had been codified in England and the United States, sellers of goods would be discharged from liability for nondelivery. For the origins of the rule in cases involving sales of specific goods, see Note 5 following Taylor v. Caldwell, supra p. 920. By Cardozo's time the beneficiaries of the discharge rule included both manufacturers (whose factories had been destroyed by fire, or according to Cardozo, shut down by "unavoidable" strikes) and farmers (whose crops had been blighted). Late nineteenth-century stalwarts of absolute liability theory occasionally objected to this liberalization of excuse. For an illustrative case see Anderson v. May, 50 Minn. 280, 52 N.W. 530 (1892), refusing to apply the discharge rule where a farmer's crop had been destroyed by an early and unusual frost. In holding the farmer liable in damages the court relied on the line of cases illustrated by School Trustees of Trenton v. Bennett, supra p. 99, and its own earlier case of Stees v. Leonard (see the quotation from the Stees opinion in the Note following the Bennett case, p. 937 supra). See also Globe Refining Co. v. Landa Cotton Oil Co., infra p. 1144, in which Justice Holmes, commenting on the hypothetical possibility of the destruction of a seller's mill by fire before delivery, wrote: "Such a misfortune would not have been an excuse, although probably it would have prevented performance of the contract." However, by the time Cardozo wrote his opinion in the principal case, the more "liberal" approach had clearly won the day. For the handling of the problem in the Sales Article of the Uniform Commercial Code, see infra p. 966.

2. Why was it that the defendant in the principal case did not benefit from the discharge rule rehearsed in the preceding paragraph?

3. Manufacturers and other sellers have, for a long time, included in their contracts so-called force majeure clauses (or, less elegantly, "strike and fire clauses"). Thus in New England Concrete Construction Co. v. Shepard & Morse Lumber Co., 220 Mass. 207, 107 N.E. 917 (1915), the contract included the provision: "All contracts are contingent upon strikes, fires, breakage of machinery, perils of navigation and all other causes beyond our control." (The reference to "perils of navigation" may suggest that the clause had been copied out of a form book; the case involved "maple flooring" to be manufactured at a mill in Burlington, Vermont, and shipped to the buyer in Salem, Massachusetts.) It is easy to understand why sellers, early in this century, should have felt they needed the protection of such clauses; there were courts like the Minnesota Supreme Court and judges like Holmes disinclined to rule favorably on the force majeure excuse unless it had been expressly contracted for. But once the law had developed to the state summarized by Cardozo in the principal case, the clauses had, evidently, become unnecessary: the manufacturing seller, for example, whose factory was destroyed by fire was discharged whether or riot it had included a strike and fire clause in the contract. Nevertheless the clauses continued, and still continue, in use. Can you think of any reason, other than simple inertia, why sellers might be well advised to include such clauses in their contracts?

4. The clause quoted from the Massachusetts case in the preceding paragraph was, in its vagueness, typical of many clauses of this type. Suppose only part of the seller's productive capacity was affected. Suppose the seller could supply some but not all of its buyers. Suppose the delay in delivery — because of, say, a strike — was only a week or a month. A moment's reflection will suggest other comparable problems — which could be, but never are, expressly dealt with in a force majeure clause. For the Code's attempt to solve some of these problems, see §2-615.

5. Force majeure clauses that operate to discharge buyers appear to be much less common than the clauses that operate to discharge sellers. For examples of a buyer's clause see The Western Alfalfa Milling Co. v. Worthington, 31 Wyo. 82, 223 P. 218 (1924), and Campbell Soup Co. v. Wentz, 172 F.2d 80 (3d Cir. 1948), reprinted infra p. 1097 (both agricultural cases); in neither case did the court seem particularly sympathetic to the buyer's attempt to provide an excuse by contract. A possible explanation for the failure of buyers' counsel to engage in force majeure drafting may be the ease with which commercial buyers could get out of unwelcome contractual obligations under the late nineteenth-century "perfect tender" rule; see Chapter 9, Section 3.