## Facts

- A buyer of molasses contracted with a seller/middleman for approximately 1,500,000 gallons of refined blackstrap molasses, to be delivered in installments beginning after April 1, 1928.
- The seller expected to obtain the molasses from a particular refinery, but the written contract did not state that supply from that refinery was a condition of performance.
- After April 1, 1928, the seller delivered only about 344,083 gallons and then stopped further deliveries.
- The seller claimed its performance was excused because the refinery reduced output and did not supply enough molasses for the seller to fulfill the contract.
- The buyer treated the non-delivery as a breach, purchased replacement molasses on the market, and sought damages based on the market-price differential.
- The trial court entered judgment for the buyer; the intermediate appellate court affirmed; the state high court affirmed.

## Issues

1. Whether a seller’s obligation to deliver a contracted quantity is discharged as “impossible” when the seller’s intended third-party source reduces output and fails to supply enough goods.
2. Whether the contract should be read to contain an implied condition that performance depended on continued production at expected levels by the seller’s contemplated supplier.

## Decision

- The court affirmed judgment for the buyer.
- The seller’s duty to deliver was not discharged by the refinery’s reduced output.
- The contract contained no express or implied condition tying the seller’s obligation to the production of the contemplated refinery.
- The buyer was entitled to cover on the market and recover the market-difference damages awarded below.

## Legal Principles

- A seller who makes an unqualified promise to supply goods is generally not excused by the failure or shortfall of its chosen source of supply, absent a contractual term making that source a condition of performance.
- An implied condition relieving a promisor will not be found unless the contract, construed in context, shows that both parties assumed the continuance of the asserted circumstances as a basis of obligation.
- The risk of third-party nonperformance ordinarily falls on the party who selected and depended on that third party and could have protected itself through contracting or explicit allocation of risk.
- Ordinary supply difficulties, including reduced output from a contemplated supplier, do not constitute impossibility where alternative procurement is not shown to be legally or physically foreclosed.

## Conclusion

The court held the middleman seller liable for breach because the contract did not limit performance to a particular refinery’s output, and a shortfall from the seller’s intended supplier was a foreseeable commercial risk rather than a ground for discharge.


Canadian Indus. Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194, 179 N.E. 383 (N.Y. 1932)