Campus Bus Service entered into a contract with Smith Bus Company to purchase 10 buses. One week before Campus Bus was scheduled to receive the buses, a fire destroyed Smith's warehouse and the buses inside. As a result, Campus Bus had to purchase its buses at a slightly higher cost from another manufacturer. Campus Bus sues Smith Bus for damages for breach of contract under these circumstances. Assume Campus Bus did not bear the risk of loss of the goods under the contract. In this scenario, _____.
A) Smith Bus should be excused from performance under the clause for the rights on improper delivery
B) Smith Bus should not be excused from performance because it did not act in good faith
C) Smith Bus should be excused from performance under the test of commercial impracticability
D) Smith Bus can exercise its right of anticipatory repudiation

Question

Quizplus · Accepted Answer

Under the circumstances mentioned in the case, Smith Bus should be excused from performance under the test of commercial impracticability because the fire was an unforeseen event that made it impossible for Smith to perform its contractual obligations. If unforeseen conditions cause a delay or inability to make delivery of the goods (make performance impracticable), the seller is excused from making delivery.

Campus Bus Service Entered into a Contract with Smith Bus