## Facts

- An auto dealer contracted to buy four school bus bodies from a bus-body dealer, with the bodies to be built on chassis supplied by the buyer.
- The parties’ oral agreement was reduced to a written contract dated May 12, 1983, identifying Superior Manufacturing as the manufacturer of the bus bodies.
- The contract set a total price of $47,660, contained no express delivery/completion date, and included no clause excusing performance if Superior failed to perform.
- The seller knew the buyer’s retail customer needed the buses by late August for the start of the school year.
- Relying on the contract, the buyer ordered four General Motors chassis; they arrived in June and early July 1983 at an entry point for delivery to the manufacturer.
- On July 7, 1983, Superior entered receivership and ceased producing the bus bodies; the seller learned of the receivership on July 8.
- The bus bodies were never manufactured; Superior ultimately went out of business.
- The parties disputed what occurred after the receivership: the buyer asserted the seller provided assurances of completion; the seller asserted the buyer chose to wait to see if Superior would resume operations.
- The trial court found that, after notice of the receivership, the buyer acquiesced in the resulting production delay.
- In December 1983, the buyer’s customer cancelled its order; the buyer sold the chassis at a loss and sued the seller for breach of contract damages.

## Issues

1. Whether the seller’s nondelivery was excused under Minn. Stat. § 336.2-615 (UCC § 2-615) because the contract’s specified manufacturer entered receivership and ceased production, making performance impracticable.
2. Whether the buyer’s post-notice conduct constituted acquiescence or waiver as to timely performance, undermining a claim of breach based on delay.

## Decision

- The court affirmed judgment for the seller after a bench trial.
- The court held that the receivership and shutdown of the contractually specified manufacturer was a contingency whose nonoccurrence was a basic assumption of the contract, excusing performance under UCC § 2-615.
- The court determined the seller had not expressly assumed the risk of the specified supplier’s failure in the parties’ agreement.
- The court upheld the trial court’s finding that the buyer acquiesced in the delay after learning of the receivership, further supporting the conclusion that the seller was not liable for nondelivery.

## Legal Principles

- Under UCC § 2-615, a seller’s delay or nondelivery is not a breach when performance becomes impracticable due to an unforeseen contingency, the nonoccurrence of which was a basic assumption of the contract, and the seller did not assume a greater obligation.
- Although sellers commonly bear the risk of supplier nonperformance, that allocation may differ when the contract specifically identifies a source of supply and the supplier’s continued operation is a basic assumption shared by both parties.
- A party’s conduct after learning of an impediment to performance may constitute acquiescence as to delay, weakening claims that timely performance was required on the original schedule.

## Conclusion

The court held that nondelivery of the bus bodies did not constitute a breach because the failure of the contractually specified manufacturer made performance impracticable under UCC § 2-615, and the buyer’s acquiescence in delay after receiving notice supported the defense to liability.


Selland Pontiac-GMC, Inc. v. King, 384 N.W.2d 490 (Minn. Ct. App. 1986)