## Facts

- An exporter (buyer) contracted to purchase 95,600 pockets of rice from a rice mill (seller) at $8.25 F.A.S. Lake Charles and/or Houston, Texas.
- The contract required shipment in December 1952 “with two weeks call from buyer” and payment by an irrevocable letter of credit opened immediately, payable against dock receipts and specified documents.
- December was a peak season with congestion at mills and docks; the buyer also faced export restrictions and difficulty arranging a ship and dock space at Houston.
- The seller received timely instructions for Lake Charles on December 10 and delivered 50,000 pockets there, completing unloading by December 31.
- For the remaining 45,600 pockets intended for Houston, the buyer did not provide shipping instructions identifying ship and dock by December 17, the last date that would permit two weeks’ performance within December.
- On December 18, the seller canceled the Houston portion while continuing Lake Charles performance.
- The market price of rice rose from $8.25 to $9.75 per pocket around the time of cancellation.
- The buyer sued for breach; the district court dismissed the complaint after the buyer’s case, and the buyer appealed.

## Issues

1. Whether the buyer’s failure to provide shipping instructions by December 17 was nonperformance of a condition precedent to the seller’s duty to deliver the Houston quantity in December.
2. Whether “December, with two weeks call from buyer” permitted the buyer to give notice after December 17 and require delivery beyond December 31.
3. Whether the seller’s continued Lake Charles deliveries after canceling Houston waived, or estopped the seller from asserting, cancellation as to Houston.

## Decision

- The Second Circuit affirmed dismissal for the seller.
- The court held that December shipment was an essential term, and the buyer’s two-week call was a condition precedent to the seller’s duty to deliver within December.
- Because the buyer failed to give timely Houston instructions, the condition precedent did not occur and the seller could treat its obligation as discharged and rescind as to the Houston portion.
- The court rejected the buyer’s interpretation that the two-week call extended the delivery period into January.
- Continued performance at Lake Charles did not waive the seller’s right to cancel Houston, because the contract permitted delivery at “Lake Charles and/or Houston” and the obligations were separable for these purposes.

## Legal Principles

- When a contract fixes a performance period and requires one party’s preliminary act to enable timely performance, that preliminary act may be a condition precedent to the other party’s duty.
- Nonoccurrence of a condition precedent attributable to the party responsible for it permits the other party to treat its performance obligation as discharged and to cancel without liability for breach.
- Courts will enforce commercially meaningful time limits where contract language and context show the time specification is material.
- A party’s continued performance of one separable portion of an agreement does not necessarily waive the right to cancel another portion based on failure of a condition precedent.

## Conclusion

The buyer’s failure to provide Houston shipping instructions in time to allow December delivery was a failure of a condition precedent; the seller was entitled to cancel the undelivered Houston quantity, and the buyer’s breach claim was properly dismissed.


Internatio-Rotterdam, Inc. v. River Brand Rice Mills, Inc., 259 F.2d 137 (2d Cir. 1958)