## Facts

- Roth Steel Products Company and Toledo Steel Tube Company (buyers) manufactured tubing and depended heavily on Sharon Steel Corporation (seller) for sheet steel supply.
- In late 1972, during relatively slack industry conditions, Sharon offered Roth specified quantities of sheet steel at prices substantially below published “book” prices, aiming to build a continuing supply relationship.
- The steel market tightened in 1973, and Sharon announced it would discontinue prior price concessions; Roth objected that a price increase violated the parties’ agreement.
- After negotiations, Sharon continued discounted pricing only temporarily and later sought to charge higher prices tied to conditions at shipment.
- The parties’ ordering and shipping practices evolved such that Roth would place orders and Sharon would accept at the price prevailing at shipment; Sharon characterized this as a mutually agreed contract modification.
- Sharon’s deliveries were often late, and Roth initially tolerated repeated delays.
- Roth’s tolerance ended after learning Sharon was allocating substantial steel to a subsidiary for resale at premium prices, which Roth viewed as preferential allocation inconsistent with Sharon’s obligations to Roth.
- Roth sued for breach under Ohio’s UCC Article 2, challenging Sharon’s attempted price increase and Sharon’s failure to perform as agreed.
- Sharon defended primarily on commercial impracticability (UCC § 2-615) and alternatively on the enforceability of the alleged price modification (UCC § 2-209).

## Issues

1. Whether Sharon was excused from performance under UCC § 2-615 due to commercial impracticability arising from steel scarcity and market changes.
2. Whether the parties’ alleged price-increase modification was enforceable under UCC § 2-209, given the UCC’s good-faith requirement for modifications.
3. Whether Roth provided adequate and timely notice of breach under UCC § 2-607(3)(a), including whether adequate notice was given in 1974.

## Decision

- The Sixth Circuit affirmed the rejection of Sharon’s UCC § 2-615 impracticability defense.
- The Sixth Circuit affirmed that the alleged price-increase modification was unenforceable because it was not sought in good faith.
- The Sixth Circuit vacated the judgment to the extent it concluded that adequate notice of breach was given in 1974 and remanded for more complete findings of fact on notice.

## Legal Principles

- UCC § 2-615 does not excuse performance merely because market conditions change, costs rise, or a contract becomes less profitable; the seller must prove impracticability tied to a contingency whose nonoccurrence was a basic assumption of the contract.
- A seller’s allocation and sales choices may defeat an impracticability claim when the record shows the seller diverted supply to more profitable channels rather than being unable to perform for the buyer.
- Under UCC § 2-209, a contract for the sale of goods may be modified without new consideration, but the modification must be made in good faith.
- A modification extracted by exploiting market power in a tight market—particularly where the seller is not seeking to avoid an actual loss and is channeling supply to favored purchasers at higher prices—may constitute bad faith and be unenforceable.
- Under UCC § 2-607(3)(a), a buyer must notify the seller of breach within a reasonable time after discovery (or when it should have discovered the breach) to preserve remedies; whether notice is adequate is a fact-intensive inquiry requiring specific findings on timing, content, and context.

## Conclusion

The Sixth Circuit held that a steel seller could not invoke UCC impracticability where its own allocation and profit-driven sales choices undercut any claim of inability to perform, and it invalidated a price modification for lack of good faith under UCC § 2-209; it remanded for further factual findings on whether the buyer gave adequate notice of breach under UCC § 2-607.


Roth Steel Prods. Co. v. Sharon Steel Corp., 705 F.2d 134 (6th Cir. 1983)