Reference no: EM133348056

Question: Did Chugach act ethically in insisting on performance by Northern in face of dangerous conditions? Explain

Does it matter if they acted ethically or not? Why or why not? Explain. do not plagiaris

Case Study: FACTS Northern Corporation (Northern) entered into a contract with Chugach Electrical Association (Chugach) in August 1966 to repair and upgrade the upstream face of Cooper Lake Dam in Alaska. The contract required North-ern to obtain rock from a quarry site at the opposite end of the lake and to transport the rock to the dam during the winter across the ice on the lake. In December 1966, North-ern cleared a road on the ice to permit deeper freezing, but thereafter water overflowed on the ice, preventing use of the road. Northern complained of the unsafe conditions of the lake ice, but Chugach insisted on performance. In March 1967, one of Northern's loaded trucks broke through the ice and sank. Northern continued to encounter difficulties and ceased operations with the approval of Chugach. How-ever, on January 8, 1968, Chugach notified Northern that it would be in default unless all rock was hauled by April 1. After two more trucks broke through the ice, causing the deaths of the drivers, Northern ceased operations and noti-fied Chugach that it would make no more attempts to haul across the lake. Northern advised Chugach that it considered the contract terminated for impossibility of performance and commenced suit to recover the cost incurred in attempting to complete the contract. The trial court found for Northern. DECISION Judgment for Northern affirmed. OPINION Boochever, J. The focal question is whether the *** contract was impossible of performance. The September 27, 1966 directive specified that the rock was to be transported "across Cooper Lake to the dam site when such lake is frozen to a sufficient depth to permit heavy vehicle traffic thereon," and *** specified that the hauling to the dam site would be done during the winter of 1966-67. It is therefore clear that the parties contemplated that the rock would be transported across the frozen lake by truck. Northern's repeated efforts to perform the contract by this method during the winter of 1966-67 and subsequently in February 1968, culminating in the tragic loss of life, abundantly support the trial court's finding that the con-tract was impossible of performance by this method. Chugach contends, however, that Northern was neverthe-less bound to perform, and that it could have used means other than hauling by truck across the ice to transport the rock. The answer to Chugach's contention is that *** the parties contemplated that the rock would be hauled by truck once the ice froze to a sufficient depth to support the weight of the vehicles. The specification of this particular method of performance presupposed the existence of ice frozen to the requisite depth. Since this expectation of the parties was never fulfilled, and since the provisions relating to the means of performance were clearly material, Northern's duty to perform was discharged by reason of impossibility. There is an additional reason for our holding that North-ern's duty to perform was discharged because of impossibility. It is true that in order for a defendant to prevail under the original common law doctrine of impossibility he had to show that no one else could have performed the contract. However, this harsh rule has gradually been eroded, and the Restatement of Contracts has departed from the early common law rule by recognizing the principle of "commercial impracticability." Under this doctrine, a party is discharged from his contract obligations, even if it is technically possible to perform them, if the costs of performance would be so disproportionate to that reasonably contemplated by the parties as to make the contract totally impractical in a commercial sense. *** *** Removed from the strictures of the common law, "impos-sibility" in its modern context has become a coat of many colors, including among its hues the point argued here-namely, impossibility predicated upon "commercial imprac-ticability." This concept-which finds expression both in case law ... and in other authorities ... is grounded upon the assumption that in legal contemplation something is impracticable when it can only be done at an excessive and unreasonable cost. ... The doctrine ultimately represents the ever-shifting line, drawn by courts hopefully responsive to commercial practices and mores, at which the community's interest in having contracts enforced according to their terms is out-weighed by the commercial senselessness of requiring per-formance. *** *** In the case before us the detailed opinion of the trial court clearly indicates that the appropriate standard was followed. There is ample evidence to support its findings that "[t]he ice haul method of transporting riprap ultimately selected was within the contemplation of the parties and was part of the basis of the agreement which ultimately resulted in amend-ment No. 1 in October 1966," and that that method was not commercially feasible within the financial parameters of the contract. We affirm the court's conclusion that the contract was impossible of performance. INTERPRETATION Commercial impracticability (unforeseen and unjust hardship) will excuse performance.