Swift Canadian Co. v. Banet
224 F.2d 36 (1955)
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Rule of Law:
In a sales contract with an F.O.B. (Free on Board) term designating the seller's location, the seller's performance is complete, and both title and risk of loss pass to the buyer, once the goods are delivered to the carrier at that specified location. A buyer's subsequent inability to import the goods due to new government regulations does not excuse the buyer's contractual obligation to pay.
Facts:
- Swift Canadian Co. (Swift), a Canadian corporation, contracted to sell a quantity of lamb pelts to Keystone Wool Pullers (Keystone), a Philadelphia-based business.
- The contract specified the price as '$3.80 each U. S. Funds F. O. B. Toronto.'
- The contract also included shipping directions to Philadelphia and a clause stating that title and risk of loss pass to the buyer when the product is loaded on cars at the seller's plant.
- After a portion of the pelts were delivered, the United States government issued stricter regulations for importing lamb pelts.
- These new regulations prevented Keystone from lawfully importing the specific type of lamb pelts from the contract into the United States.
- When Swift was ready to deliver the remainder of the pelts to the railroad cars in Toronto, Keystone refused to accept them, citing the new import regulations.
Procedural Posture:
- Swift Canadian Co. (plaintiff) sued Keystone Wool Pullers (defendant) for breach of contract in federal district court.
- After the parties filed a stipulation of facts, both parties moved for summary judgment.
- The district court (trial court) granted summary judgment for the defendant, Keystone Wool Pullers.
- The plaintiff, Swift Canadian Co., appealed the grant of summary judgment to the United States Court of Appeals.
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Issue:
Does a new government regulation that prevents a buyer from importing goods into the United States excuse the buyer's duty to perform under a contract that specifies delivery as 'F.O.B. Toronto,' the seller's location?
Opinions:
Majority - Goodrich, Circuit Judge
No, a new government regulation preventing importation does not excuse the buyer's duty to perform. The term 'F.O.B. Toronto' defines the point at which the seller completes its obligations and risk passes to the buyer. The seller's performance was complete, or tendered, once it made the goods available to the carrier in Toronto. The shipping directions to Philadelphia were merely for the buyer's convenience and did not alter the F.O.B. term, which governed the passage of risk. Once the risk transferred to Keystone in Toronto, its inability to import the goods into the United States was its own problem, as it could have shipped the goods to any other destination in the world. The seller, having been ready, willing, and able to perform its duties, is entitled to the value of its bargain.
Analysis:
This decision reinforces the legal significance of F.O.B. terms under the Uniform Sales Act (a precursor to the Uniform Commercial Code) in allocating risk between commercial parties. It establishes that an 'F.O.B. seller's location' term definitively transfers the risk of subsequent events, including governmental frustration of purpose, to the buyer upon the seller's delivery to the carrier. This ruling provides commercial certainty in international trade by clearly delineating the seller's and buyer's responsibilities, holding that ancillary terms like shipping directions do not override the primary risk-allocation function of an F.O.B. provision.
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