Iron Trade Products Co. v. Wilkoff Co.
272 Pa. 172 (1922)
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Rule of Law:
A seller is not excused from performing under a contract when the buyer's own legitimate purchases in a limited market make the seller's performance more difficult or expensive, as such market activity does not constitute prevention of performance.
Facts:
- In July 1919, Iron Trade Products Co. (plaintiff/buyer) contracted to purchase 2,600 tons of section relaying rails from Wilkoff Co. (defendant/seller) for $41 per ton.
- The supply of such rails was very limited, with only two major sources available in the United States.
- While Wilkoff Co. was negotiating to acquire the rails, Iron Trade Products Co. entered the same limited market to purchase a similar quantity of like rails for its own purposes.
- Iron Trade Products Co.'s purchasing activity reduced the available supply and increased the market price of the rails.
- The contract did not specify a particular source from which Wilkoff Co. must procure the rails, nor did it prohibit Iron Trade Products Co. from purchasing other rails on the open market.
- Wilkoff Co. ultimately failed to deliver any of the contracted rails to Iron Trade Products Co.
Procedural Posture:
- Iron Trade Products Co. filed suit against Wilkoff Co. in the court of first instance for breach of contract.
- Wilkoff Co. filed an affidavit of defense and a supplemental affidavit, arguing that Iron Trade Products Co.'s actions excused its non-performance.
- The trial court found Wilkoff Co.'s affidavits of defense legally insufficient.
- The trial court entered a judgment in favor of the plaintiff, Iron Trade Products Co.
- Wilkoff Co., as the appellant, appealed the trial court's judgment to the Supreme Court of Pennsylvania.
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Issue:
Does a buyer's purchase of similar goods in a limited market, which increases the price and difficulty for the seller to obtain those goods, constitute an act of prevention that legally excuses the seller's non-performance of the contract?
Opinions:
Majority - Mr. Justice Walling
No. A buyer's independent market activity that makes a seller's performance more difficult or expensive does not legally excuse the seller's breach of contract. Mere difficulty of performance is not a valid excuse for non-performance. The court reasoned that for the doctrine of prevention to apply, one party's conduct must make the other's performance impossible, not just more burdensome. Here, Iron Trade Products Co. was under no obligation to refrain from purchasing other rails, and its actions, while making Wilkoff Co.'s task harder, did not exhaust the supply or otherwise render performance impossible. The court distinguished this case from United States v. Peck, where there was a mutual understanding that the goods would come from a specific source which the buyer then made unavailable. Without such an understanding or an intent to interfere, the buyer's actions were legitimate market competition, and the seller bore the risk of price fluctuations.
Analysis:
This decision clarifies the scope of the prevention doctrine as a defense for breach of contract, establishing that ordinary competitive market behavior by a party does not excuse the other party's failure to perform. It reinforces the principle that contracting parties assume the risk of market fluctuations and increased difficulty, short of actual impossibility. The ruling protects the stability of contracts by preventing parties from escaping their obligations due to unfavorable market shifts, even when those shifts are influenced by their contractual counterparties' legitimate business activities.
