## Facts

- A voyage charter required Transatlantic Financing Corporation (operator of the S.S. CHRISTOS) to carry a full cargo of wheat from a U.S. Gulf port to Bandar Shapur, Iran, for the United States.
- The charter specified origin and destination but did not specify the route.
- At contracting, the usual route from the Gulf to Iran was through the Suez Canal.
- After the vessel departed, hostilities in the Suez Crisis led Egypt to close the Suez Canal by obstructing it with sunken ships.
- Transatlantic contacted a Department of Agriculture employee seeking instructions and agreement for additional compensation if the ship went around the Cape of Good Hope; the employee stated performance was expected and he lacked authority to agree to extra payment.
- Transatlantic rerouted around the Cape of Good Hope, delivered the wheat safely to Iran, and was paid the contract freight rate.
- Transatlantic filed an admiralty action seeking additional compensation for the extra costs, framed in quantum meruit.
- The district court dismissed the claim; Transatlantic appealed.

## Issues

1. Whether closure of the Suez Canal made performance of the voyage charter legally impossible or commercially impracticable so as to excuse performance or justify adjustment of the contract obligations.
2. Whether the shipowner could recover additional compensation in quantum meruit for completing the voyage by the longer Cape of Good Hope route.

## Decision

- The D.C. Circuit affirmed dismissal of the shipowner’s claim.
- The canal closure was an unexpected event, but it did not render performance commercially impracticable.
- Because the contract remained enforceable as written and performance was completed, the shipowner was not entitled to compensation beyond the contract freight rate.
- Quantum meruit recovery was denied because the undertaking was not essentially different from what the charter required.

## Legal Principles

- Commercial impracticability/impossibility requires: (1) an unexpected occurrence, (2) no allocation of the risk of that occurrence by contract or trade custom, and (3) resulting commercial impracticability of performance.
- “Impracticability” is not literal impossibility; it requires extreme and unreasonable difficulty or expense, not merely a cost increase.
- When a contract sets voyage termini but not a route, a disruption to the expected route does not, by itself, shift risk or entitle the carrier to extra payment absent a binding modification.
- A party that completes performance with knowledge of changed conditions, without an enforceable agreement for additional compensation, generally bears its own added costs.

## Conclusion

The court held that rerouting around the Cape of Good Hope after the Suez Canal’s closure increased expense but did not fundamentally change or make impracticable the contractual obligation to transport wheat by sea to Iran, so the shipowner was limited to the agreed freight rate and could not recover additional costs in quantum meruit.


Transatlantic Fin. Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966)