Case Analysis of Transatlantic Financing Corp. v. United States
A company may be required to cover the added expenses of performing a contract in a manner different from the usual and customary method if such usual and customary method becomes impossible subsequent to the signing of the contract. Although the exact parameters of the additional labor and expenses a company may be required to cover are not laid out in detail, the case indicates that labor amounting to 30 percent more than that contracted for and expenses amounting to almost 15 percent more than that contracted for will be the responsibility of the performing company in the absence of any contractual provision for its payment by the other contracting party.
Justification for Problem Definition
Transatlantic Financing Corp. v. United States
In the case of Transatlantic Financing Corporation v. United States, 363 F.2d 312 (1966), Transatlantic Financing Corporation (hereafter "Transatlantic") appealed to the United States Court of Appeals from a lower court decision. The lower court had denied Transatlantic's suit to recover the added expenses of shipping a cargo of wheat from Texas to Iran via the Cape of Good Hope rather than the usual route via the Suez Canal. Transatlantic had been unable to ship the goods via the usual route because Egypt was at war with Israel when the goods were being shipped and had blocked the Suez Canal to shipping.
The contract between Transatlantic and the United States did not expressly condition that the cargo would be shipped via the Suez Canal. Undoubtedly, however, both parties expected that this would be the route used as this was the usual and customary route for shipping to Iran. But, more significantly, the appellate court stated that there were no provisions in the contract from which it could infer "that the continued availability of Suez was a condition of performance. Nor is there anything in custom or...