Also known as: non-delivery · nondeliveries
Written by attorneys · grounded in primary & secondary sources — see below
Failure by a seller to transfer goods to the buyer as required by a contract for sale. The failure may be excused when performance has become impracticable because of an unforeseen contingency whose nonoccurrence was a basic assumption of the contract. A buyer may recover damages measured by the difference between market price and contract price together with incidental and consequential damages.
Neptune Energy agreed to supply natural gas to Nexus Financial under a fixed-price contract. After formation, a federal order prohibited all sales from the only approved field. Neptune notified Nexus of the prohibition and ceased performance. Nexus sued for nondelivery, but the court held the duty discharged because the regulatory order made performance impracticable without Neptune's fault.
National Trust contracted to deliver timber to Nova Pharmaceuticals. A sudden export restriction made full performance impossible. National Trust continued shipments for two months without informing Nova of the restriction or any allocation plan. When Nova sued for nondelivery, the court denied the impracticability defense because National Trust failed to give seasonable notice of the delay.
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Nancy Nelson ordered specialized pumps from Nathan Nguyen for a construction project. Nguyen failed to deliver any pumps by the contract date. Nelson purchased substitute pumps from another supplier at a higher price and sued for the difference. The court awarded damages for nondelivery measured by the cost of cover.
Neil Nair agreed to sell wheat to Noreen Nguyen at $5 per bushel. Nair repudiated before any delivery. On the date Nguyen learned of the breach, the market price had risen to $7 per bushel. Nguyen sued and recovered the difference between market price and contract price plus incidental costs.
A paving company bought asphalt from an oil supplier under a long-term contract containing a posted-price clause. For years the supplier charged a lower price reflecting local market conditions. When the supplier later insisted on the higher posted price and refused further deliveries, the buyer sued for nondelivery. The court held that the established course of performance controlled and the refusal constituted nondelivery.
An airline contracted with an oil company for jet fuel at a fixed formula price. World events caused crude-oil prices to rise sharply, but the supplier could still obtain and deliver fuel. The supplier refused to perform at the contract price and claimed impracticability. The court rejected the defense and held the refusal constituted nondelivery.
A seller's duty is discharged when an unforeseen contingency whose nonoccurrence was a basic assumption of the contract makes performance impracticable, provided the seller seasonably notifies the buyer and allocates any remaining capacity fairly.
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The seller must allocate production and deliveries among customers in a fair manner and must notify the buyer seasonably of the delay or nondelivery and of any estimated quota.
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Damages equal the difference between the market price at the time the buyer learned of the breach and the contract price, plus incidental and consequential damages, less expenses saved because of the breach.
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No. When the buyer repudiates or fails to pay, the seller may lawfully withhold delivery, and the buyer cannot treat that lawful action as a new repudiation giving rise to damages.
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…Compare Uniform Commercial Code § 2-615(a), which provides that, in the absence of an assumption of greater liability, delay or non-delivery by a seller is not a breach if performance as agreed is made “impracticable” by the occurrence of a “contingency” the non-occurrence of which was a “basic assumption on which the contract…