## Facts

- Publicker Industries, Inc. contracted in July 1972 to buy its requirements of spirits-grade ethanol from Union Carbide Corp. for three years.
- The contract set a base price per gallon and included an escalator tied to Union Carbide’s “Standard Cost” of ethylene, an important input.
- The contract also imposed a firm maximum price via a schedule capping the per-gallon price through the contract term.
- After the 1973 oil embargo, ethylene costs rose sharply; Union Carbide asserted it would incur substantial losses if it continued deliveries under the capped pricing.
- Union Carbide demanded removal of the contractual price ceiling and threatened to stop deliveries if Publicker did not agree.
- Publicker refused to amend and sued for specific performance to compel continued supply at the contract price, including the ceiling.
- Union Carbide argued that its performance was excused by the contract’s force majeure clause and by commercial impracticability under U.C.C. § 2-615.
- The parties submitted a preliminary legal question: whether the court could alter the contract’s pricing terms (remove or relax the ceiling) rather than enforce the agreement as written or excuse performance.

## Issues

1. Whether U.C.C. § 2-615 or the contract’s force majeure clause excused Union Carbide’s performance due to drastic increases in ethylene costs.
2. Whether a court may judicially modify the contract’s negotiated price mechanism (including a price ceiling) based on alleged commercial impracticability or force majeure.

## Decision

- The court declined to reform or rewrite the contract’s price provisions, including the ceiling.
- The court held that neither U.C.C. § 2-615 nor the force majeure clause authorized judicial repricing to relieve the seller from losses.
- The court treated the escalator-and-cap structure as an agreed allocation of the risk of input-price volatility.
- The preliminary ruling favored enforcing the original pricing arrangement rather than substituting new price terms.

## Legal Principles

- Under U.C.C. § 2-615, increased costs and reduced profitability generally do not establish commercial impracticability when the relevant risk was foreseeable or expressly allocated by contract.
- Force majeure clauses are construed narrowly; general market price escalation, without more, does not ordinarily excuse performance absent clear contractual language.
- Courts applying Article 2 generally enforce negotiated pricing formulas and risk allocations and will not supply a new bargain by judicially adjusting price terms in response to adverse market shifts.

## Conclusion

The court refused to remove a negotiated price ceiling in a requirements supply contract, reasoning that the parties had expressly addressed input-cost volatility through a price escalator and cap; consequently, sharp cost increases did not justify force majeure relief, § 2-615 relief, or judicial repricing.


Publicker Indus., Inc. v. Union Carbide Corp., 17 U.C.C. Rep. Serv. (Callaghan) 989 (E.D. Pa. 1975)