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Roth Steel Products v. Sharon Steel Corp

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Bloomberg Law

Citation. 705 F.2d 134, 1983 U.S. App. 28981, 35 U.C.C. Rep. Serv. (Callaghan) 1435

Brief Fact Summary. Roth Steel Products (Plaintiff) sued Sharon Steel Corp. (Defendant) for breach of contract, with emphasis on a modification contract. Defendant appeals from the judgment of the District Court for the Plaintiff.

Synopsis of Rule of Law. A party may modify a contract without consideration as long as it is modified in good faith.


Facts. Plaintiff contracted to purchase 200 tons of steel per month from Defendant at a price of $148 per ton. Defendant also stated that it would sell the steel on an open schedule basis for $140. At that time the steel market was operating at 70% capacity and Plaintiff has a price that was substantially lower than Defendant’s book price for steel. Then the market was operating at full capacity and steel producers were experiencing delays in filling orders. Defendant then notified its customers including Plaintiff that it was discontinuing its price concessions. The parties then agreed to a contract modification that Plaintiff would pay the agreed on a specific price which Plaintiff was reluctant to do but had to do due to necessity. Then the parties operated on a different basis where Plaintiff would order the steel and Defendant would accept the order at the price prevailing at the time of shipment. Defendant had many late deliveries, but Plaintiff acquiesced to this pattern. Howe
ver, Plaintiff’s acquiesce ended when Plaintiff learned Defendant was allocating substantial quantities of steel to a subsidiary for sale at premium prices. Plaintiff sued Defendant for breach of contract, with special emphasis on the modification contract after the original agreement. Defendant raised defenses including impracticability and in the alternative the agreed modification. The District Court held that the Defendant was not excused form the modified contract on the grounds of impracticability and the modification was unenforceable. Defendant appeals.

Issue. Whether the modification of the contract is enforceable?

Content Type: Brief


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