PROTECTING THE INTERESTS OF EXPORTERS IN INTERNATIONAL TRADE AGAINST THE RISKS OF IMPOSSIBILITY OR IMPRACTICABILITY OF
This case study addresses various aspects of the problems posed to exporters by extraordinary international conditions or circumstances which may prevent it or its buyer from performing or otherwise produce unacceptable levels of risk. In Tsakiroglou & Co., Ltd. v. Noblee Thorl GmbH (1962) A.C. 93 House of Lords, a buyer entered into a contract with a supplier for the delivery of Sudanese groundnuts at a fixed price. The 1956 Arab-Israeli war resulted in the closure of the Suez Canal presenting to the exporter the alternatives of performing the contract by shipping the groundnuts via the Cape of Good Hope at a transport cost 100 percent higher than that stated in the contract or failing to perform. The exporter chose not to perform and was ultimately held liable by a British court for its failure to do so. In Transatlantic Financing Corp. v. United States, 312 F. 2d 312 (1966) (D.C. Cir.), an American shipper contracted with
the USG to ship wheat to Iran, performed the contract even though the same Arab-Israeli war caused it to ship the wheat around the same Cape and sued the USG for the extra transport costs it incurred. The D.C. Court of Appeals held that the exporter could not recover those costs. These and other cases illustrate the high risk nature of international sales and transportation contracts the performance of which may be impeded or made more expensive by extraordinary risks, primarily of a political nature. Legal standards protecting exporters are somewhat more liberal than in the past, having progressed from a situation where only physical impossibility to perform is an acceptable excuse for non-performance to the 20th century doctrines of frustration of contractual performance and commercial impracticability, but even under the latter doctrines, legal relief is often not available except in ve...