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Commercial impracticability

Should Linde be discharged on the grounds of commercial impracticability?

United Aluminum Corporation (UAC) manufactured aluminum coil. For many years, Linde supplied UAC with the nitrogen it needed for its manufacturing processes. The companies signed a long-term contract in 1997, which said, in part:
Linde agrees that at UAC's sole option, UAC may extend the term of this Agreement for a maximum of five years commencing upon August 31, 2008.
The contract also called for a price of $0.23 per unit of nitrogen.
In 2007, UAC sent Linde a letter which stated, in part, "UAC intends to exercise its option to extend the term for an additional five years from September 1, 2008 to August 31, 2013." Linde replied that the price of nitrogen had risen significantly over the life of the contract and that it would have to increase prices by 38 percent.
UAC sued, seeking the right to continue buying nitrogen from Linde at $0.23 per unit. Linde defended on the grounds of commercial impracticability.

Solution Preview

Price rise alone is not sufficient ground for discharge on the ground of commercial impracticability. If such price rise has occurred due to unforeseen circumstances or events such as flood, war, natural ...

Solution Summary

This solution discusses a situation related to commercial impracticability.