Contracts II, Pages 938–944

McCloskey & Co. v. Minweld Steel Co.

United States Court of Appeals for the Third Circuit, 1955

Facts:

Defendant, a steel-maker, agreed to provide and build all of the structural steel required in plaintiff's building of two buildings, as well as to furnish all long span steel joists required in the construction of one of the buildings. The contracts said that if defendant refused to neglected to supply sufficient materials, plaintiff could, after two days notice, either get the materials elsewhere and deduct the cost from defendant or simply terminate the employment of defendant. It did not state a date for defendant's performance.

After giving the plans for the buildings, plaintiff asked defendant on June 8 when to expect delivery of the steel. On June 13 defendant told plaintiff to expect delivery on September 1 and that the steel would be done being erected on November 15. A week later, plaintiff threaten to terminate the contract unless defendant gave unqualified assurances that it had definite plans for procurement, fabrication, and delivery within 30 days. Defendant replied that it was having trouble procuring the steel, as, although it immediately placed orders for the steel, its order was on hold for two weeks before being told that it could not be supplied. Afterwards, both other companies defendant contacted could not supply it. In addition, the government was restricting the steel market, so defendant had no one else from which to buy and so requested plaintiff's help in obtaining a supplier.

Plaintiff took this letter to be saying that defendant repudiated the contract, so plaintiff did the same. Plaintiff easily procured steel from another company and hired another subcontractor to do the work defendant was supposed to.

Procedural History:

Trial court granted defendants' motions for judgment on the ground that plaintiff did not show a cause of action.

Issue:

Did defendant repudiate, and therefore breach, the agreement?

Plaintiff's Argument:

Defendant repudiated the agreement by saying that it could not find a steel supplier, which meant that it could not fulfill the agreement in the 30-day limit plaintiff set.

Rule:

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"In order to give rise to a renunciation amounting to a breach of contract, there must be an absolute and unequivocal refusal to perform or a distinct and positive statement of an inability to do so."

Reasoning:

Even if plaintiff's 30-day limit constituted a fixed date, defendant merely said that it could not give an assurance that the steel would be delivered within 30 days. The contract did not authorize plaintiff to demand such an assurance anyway.

Holding:

Defendant's letter did not breach the agreement. Affirmed.


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