N.Y. Cent. Ironworks Co. v. United States Radiator Co.

174 N.Y. 331, 66 N.E. 967 (1903)

 

RULE:

If a party contracts for goods upon a rising market he is ordinarily entitled to such profits as may accrue to him by reason of a prudent or favorable contract.

FACTS:

In the underlying action, plaintiff sought to recover damages for the breach of a written executory contract between the parties for the sale and delivery of goods. The contract was an open one as to the quantity of goods that defendant was to deliver. When plaintiff ordered significantly more goods than usual, defendant refused to provide the additional goods. Defendant construed the contract as calling for only the usual amount of goods and not materially exceeding the quantity delivered in any one year before under a similar contract. Defendant claimed that there was a mutual mistake in framing the contract, and defendant asked that the contract be reformed in this respect. The trial court found for the plaintiff, and defendant appealed. On appeal, the court rejected that argument and affirmed the lower court's judgment.

ISSUE:

Where contracting parties left the contract open and indefinite as to the quantity of goods that the buyer might order, could the buyer order a much larger quantity under the lower contract price after a market price increase in the goods?

ANSWER:

No.

CONCLUSION:

Defendant argued that a limitation of quantity was necessarily imported into the contract and that it should be construed as containing it.  The court determined that the parties intentionally left the contract open and indefinite as to the quantity of goods that the plaintiff might order from time to time. Plaintiff was not acting reasonably or in good faith, but using the contract for a purpose not within the contemplation of the parties; that is to say, for speculative as distinguished from  regular and ordinary business purposes. But no defense of this kind was either pleaded or proved in this case, and so the judgment must be affirmed, with costs.

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