Quality Scrap Company contracts to provide ten tons of steel at $500 per ton to Rendered Materials, Inc. An unforeseen shortage occurs suddenly, making it impossible for Quality to fulfill the contract for less than $5,000 per ton. The firm's best defense against performing the contract is that
A) performance of the contract is commercially impracticable.
B) procuring the steel would force the company into bankruptcy.
C) the law has rendered performance of the contract illegal.
D) the specific subject matter of the contract has been destroyed.

Question

Quality Scrap Company contracts to provide ten tons of steel at $500 per ton to Rendered Materials, Inc. An unforeseen shortage occurs suddenly, making it impossible for Quality to fulfill the contract for less than $5,000 per ton. The firm's best defense against performing the contract is that​
A) ​performance of the contract is commercially impracticable.
B) ​procuring the steel would force the company into bankruptcy.
C) ​the law has rendered performance of the contract illegal.
D) ​the specific subject matter of the contract has been destroyed.

Quizplus · Accepted Answer

The best defense in this situation would be that performance of the contract is commercially impracticable due to the unforeseen shortage causing a significant increase in cost. This defense falls under the doctrine of commercial impracticability or frustration of purpose, which excuses a party's performance if an unforeseen event has rendered performance commercially impracticable or frustrated the purpose of the contract. The other options (B, C, and D) do not apply to this situation.

Quality Scrap Company Contracts to Provide Ten Tons of Steel