## Facts

- The North Carolina Division of Purchase and Contract solicited bids for approximately 1,200 school bus chassis to be procured for local boards of education.
- Bobby Murray Chevrolet, Inc., a General Motors (GM) franchisee dealer, submitted the lowest responsible bid, and a statewide contract was formed for the 1989–1990 procurement period.
- Local school boards timely placed orders under the contract for Chevrolet bus chassis meeting specified requirements.
- In mid-1990, new EPA emissions regulations made the specified diesel engine noncompliant for continued production.
- GM communications to Bobby Murray indicated production delays and later cessation, including due to claimed unavailability of transmissions and regulatory noncompliance.
- Bobby Murray notified the Division in December 1990 that it could not supply the chassis and ultimately delivered none.
- The school boards obtained replacement chassis from other vendors at higher prices and sought the price difference as damages.

## Issues

1. Whether the dealer’s nondelivery was excused as commercial impracticability under N.C. Gen. Stat. § 25-2-615 based on GM’s failure or inability to supply the chassis.
2. Whether intervening EPA emissions regulations excused performance under § 25-2-615 as good-faith compliance with governmental regulation.
3. Whether the dealer avoided liability by showing it acted as GM’s agent (actual or apparent) in contracting with the school boards.
4. Whether any genuine issue of material fact precluded summary judgment for the school boards on breach and damages.

## Decision

- The Court of Appeals affirmed summary judgment for the school boards.
- Bobby Murray breached by failing to deliver the ordered chassis, and no genuine issue of material fact existed on breach or damages.
- Commercial impracticability did not excuse performance because the contracts did not specify GM as an exclusive source and the school boards lacked reason to know GM was the dealer’s sole source.
- The EPA regulatory change did not excuse performance where the contract allocated to the dealer responsibility for regulatory compliance affecting the goods.
- No evidence supported actual or apparent agency that would shift contractual liability from the dealer to GM.

## Legal Principles

- Under N.C. Gen. Stat. § 25-2-615, a seller is not excused by failure of its chosen supplier unless the supplier’s continued performance was a basic assumption of the parties’ contract, such as where an exclusive source is specified or clearly contemplated by both sides.
- A party whose performance depends on a third party’s cooperation generally cannot invoke that third party’s later refusal or inability to cooperate as an impossibility or impracticability defense against the buyer absent the required contractual assumption.
- Compliance with governmental regulation may excuse performance under § 25-2-615 only if the contract does not allocate the regulatory risk to the nonperforming party.
- Agency (actual or apparent) requires evidence that the alleged principal authorized the agent to bind it or that the counterparty reasonably believed it was contracting with the principal based on the principal’s manifestations.

## Conclusion

The court held the dealer liable for nondelivery and affirmed damages for the school boards, concluding that neither supplier failure nor post-contract regulatory changes excused performance under § 25-2-615 and that no agency relationship shifted responsibility to the manufacturer.


Alamance Cnty. Bd. of Educ. v. Bobby Murray Chevrolet, Inc., 121 N.C. App. 222, 465 S.E.2d 306 (N.C. Ct. App. 1996)