Am. Trading & Prod. Corp. v. Shell Int'l Marine, Ltd. - 453 F.2d 939 (2d Cir. 1972)

Rule:

Mere increase in cost alone is not a sufficient excuse for non-performance. It must be an extreme and unreasonable expense.

Facts:

Plaintiff American Trading and Production Corporation and defendant Shell International Marine, Ltd. contracted for transportation of cargo from Texas to India. Because a canal which was the anticipated passageway was closed due to a state of war which had developed in the Middle East, plaintiff decided, without an opinion by defendant, to make an alternative passage which required it to incur one-third more expenses than it would have incurred had it been able to use the anticipated passageway. Plaintiff sued defendant for the additional compensation. The district court dismissed plaintiff’s complaint. Plaintiff sought review of the decision. 

Issue:

Under the circumstances, was the plaintiff entitled to recover for additional compensation? 

Answer:

No.

Conclusion:

The reviewing court affirmed the judgment of the district court, denying recovery in quantum meruit because the one-third increase in expenses was insufficient to constitute commercial impracticability where the parties did not agree that the canal would be the exclusive method of performance, only the most probable route. The court also denied recovery under the contract, holding that the liberties clause did not permit additional compensation because the cargo was not deposited at an alternate port due to dangerous conditions.