Brief Fact Summary. Plaintiff and Defendant had an installment contract where Plaintiff bought lead from Defendant. Plaintiff’s payment for an order of lead was late. Defendant refused to send the order.
Synopsis of Rule of Law. In an installment contract, on must perform even if the other party is late in performance unless, it would cause unreasonable hardship to perform or one reasonably believes the other party will not perform.
Plaintiff, a Pennsylvania buyer, had a contract with Defendant, a Canadian seller to buy lead. Throughout their dealings with each other both complained, rightly, that the other was slow to perform. Plaintiff and Defendant made a contract for 200 tons of lead to be delivered to Plaintiff no later than Dec 25. They agreed that at least 63 percent of the price per carload would be paid shortly after each shipment, with the balance to be paid within four weeks after delivery. The shipment began, although the second and third ones were after Dec 25. Plaintiff paid for the first and second shipments in a more or less timely fashion. The third shipment, which arrived on March 23, was not paid for. On April 7, Plaintiff said he needed more lead or he would have to buy it on the open market. Defendant replied that unless the previous installment was paid for, he would not send any more lead. On June 2, Defendant notified Plaintiff that the Canadian Government had imposed export contro
ls on lead. Plaintiff complained during that time, that he was selling lead faster than he could get it in and that he was withholding payment on the third shipment because Defendant refused to send the fourth.
Issue. Was Defendant justified in withholding delivery of the forth shipment because Plaintiff had not paid for the third?
In an installment contract, on must perform even if the other party is late in performance unless, it would cause unreasonable hardship to perform or one reasonably believes the other party will not perform.
During this time, Defendant had plenty of lead and could easily have shipped it at little economic risk. Furthermore, the price of lead was rising and he sold lead to other buyers at a higher price.
Discussion. Defendant lost because he had assurance that Plaintiff would pay if he sent in the fourth shipment. His motive for not performing was that he could sell the lead at a higher price to someone else.