## Facts

- American Trading (shipowner) and Shell (charterer) entered a March 23, 1967 voyage charter for the tanker WASHINGTON TRADER to carry a full cargo of lube oil from up to three U.S. Gulf ports to Bombay, India.
- Freight was set by reference to the American Tanker Rate Schedule plus a stated additional amount, including a per-ton charge associated with Suez Canal passage.
- The vessel loaded about 16,183 long tons and departed Texas on or about May 15, 1967; Shell paid the freight invoice before the canal closure.
- With Middle East hostilities expected, the owner ordered the vessel to take additional bunkers at Ceuta in anticipation of a possible diversion.
- On June 5, 1967, the Suez Canal closed due to war conditions; the vessel proceeded to Bombay via the Cape of Good Hope, adding substantial distance and expense.
- The owner reserved a claimed right to extra compensation and later billed Shell $131,978.44 for the added costs of the Cape route; Shell refused to pay.
- Shell asserted a cross-claim related to unused Suez Canal tolls; the district court dismissed both sides’ claims on the merits.

## Issues

1. Whether the voyage charter implicitly required Suez Canal transit as the exclusive or contractually assumed method of performance.
2. Whether Suez Canal closure made performance commercially impracticable (or legally impossible) so as to discharge the original freight terms or entitle the owner to additional compensation.

## Decision

- The Second Circuit affirmed the judgment dismissing the owner’s claim for additional compensation.
- The charter obligated carriage from the U.S. Gulf to Bombay and did not make Suez transit an express or implied condition of performance.
- Routing via the Cape of Good Hope was an available alternative consistent with completing the contractual destination.
- The increased costs and time from the Cape route were not so extreme as to constitute commercial impracticability.
- The risk of canal closure was foreseeable at contracting and was not reallocated by the parties; the fixed freight bargain therefore controlled.

## Legal Principles

- A contract for transportation to a destination does not, without clear language, become a guarantee of a particular route.
- Commercial impracticability requires an extreme and unreasonable burden; a substantial but limited increase in cost alone does not excuse performance or justify repricing.
- Foreseeable contingencies not addressed in the agreement are generally treated as risks borne by the promisor rather than grounds for judicial adjustment of the contract price.
- Completing performance by a reasonable alternative means ordinarily defeats claims of impossibility or impracticability based on the unavailability of the preferred method.

## Conclusion

The court held that Suez Canal closure did not alter the charter’s fixed freight obligation because the contract required delivery to Bombay, not transit via Suez, and the added expense of the Cape route—foreseeable and not extreme—did not satisfy the narrow standard for commercial impracticability.


American Trading & Prod. Corp. v. Shell Int’l Marine Ltd., 453 F.2d 939 (2d Cir. 1972)