Iron Trade Products Co. v. Wilkoff Co

Brief Fact Summary. Iron Trade Products Co. (Plaintiff) and Wilkoff Co. (Defendant) had a contract for the purchase and delivery of rails from the Defendant. Defendant appeals from a judgment for the Plaintiff and the dismissal of Defendant’s affidavit of defense and supplement.

Synopsis of Rule of Law. If a party seeking to obtain specific goods entered into a contract for a quantity of goods and then made performance on the contract by the seller more difficult by making other purchases, which increased the scarcity of the availability of the goods, their conduct is no excuse for refusing to perform the prior contract.

Facts. Plaintiff entered into a written contract with the Defendant for the purchase of 2,600 tons of section relaying rails to be delivered in New York harbor fro $41.00 a ton. Defendant failed to deliver any of the rails and subsequently Plaintiff brought this suit alleging that it was compelled to purchase the rails elsewhere and that the market price of the rails at the time and place of delivery was $50.00 per ton and claimed damages, the difference between what it had been compelled to pay and the contract price. Defendant filed an affidavit of defense and supplement, the court held it insufficient and entered judgment for the Plaintiff. Defendant appealed.

Issue. Whether a party, who enters into a contract for specific goods and subsequently made performance on the contract by the seller more difficult, is excused for refusal to perform the prior contract?

Held. No. Judgment affirmed.
Defendant argues that there were only two suppliers of rails in the United States and at the time of delivery Defendant was negotiating for the required rails when Plaintiff announced to the trade the urgent desire to purchase a similar quantity of rails. Mere difficulty of performance will not excuse a breach of contract. Williston on Contracts states that “if a party seeking to secure all the merchandise of a certain character which he could, entered into a contract for a quantity of the required goods, and subsequently made performance of the contract by the seller more difficult by making other purchases which increased the scarcity of the available supply, his conduct would furnish no excuse for refusal to perform the prior contract.”
Here, Plaintiff’s conduct did not prevent the performance by Defendant even though it may have made Defendant’s job more difficult. Therefore, Plaintiff’s conduct is not excused for refusing to perform the contract.
The Plaintiff was entitled to damages measured by the difference between the contract price and the price paid to obtain substitute goods.

Discussion. In every contract there is an implied covenant that neither party shall do anything, which will have the effect of destroying the right of the other party to receive the benefits of the contract. This covenant is also known as the implied covenant of good faith and fair dealing. Good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing in the particular trade.