American Trading & Prod. Corp. v. Shell Int’l Marine, Ltd.
United States Court of Appeals, Second Circuit, 1972.
453 F.2d 939.

Facts:

American Trading agreed to let Shell use their vessel to transport cargo from Texas to India. The rates were based on a voyage that would travel through the Suez Canal.

  • During the voyage, American notified Shell of trouble in the Canal and suggested they delay in entering.
  • The Canal ended up being closed due to war, and Shell decided against waiting and continued on an alternate route.
  • This decision led to an extra 30 days and about 9,000 miles of travel.
  • American sued to recover $132,000 in extra compensation:
    • They argued the Suez Canal was the specific means of performance, and the supervening destruction of it rendered the contract impossible to perform. Therefore, they were operating without a K – hence, unjust enrichment.
      • Prof: It was a way to get rid of the now-terrible K.
  •  Shell refused to pay.

History:

The lower court dismissed American’s claim for additional compensation.

Issue:

Was American excused from performance on the theory of impracticability?

Holding:

No. Affirmed.

Reasoning:

  • The court held that although the Canal route was the contemplated and probable route, it was not the exclusive method of performance (the contract made no reference to a fixed route).
  • Further, the doctrine of impracticability didn’t apply, since there wasn’t any extreme or unreasonable expense here:
    • Mere increase in cost alone is not a sufficient excuse for nonperformance.
  • Finally, it’s reasonable to expect owner-operators to insure against things like this:
    • They are in the best position to calculate the cost of performance by alternative routes and are sensitive to international troubles affecting the demand and cost of their services.