Opinion ID: 437273
Heading Depth: 2
Heading Rank: 1

Heading: Reasonable Allocation

Text: 51 On cross appeal, 16 Helm contends that the district court erred by limiting damages under orders 05 and 07 to amounts of polystyrene that Cosden should have allocated to Helm. Instead, Helm argues that it should receive market-contract damages for all the general purpose polystyrene that Cosden contracted to deliver under 05 and 07. We agree. 52 The jury found that Cosden was excused under section 2.615(1) from delivering general purpose polystyrene (orders 05 and 07) due to the failure of presupposed conditions. 17 See generally Robberson Steel, Inc. v. J.D. Abrams, Inc., 582 S.W.2d 558 (Tex.Civ.App.--El Paso 1979, no writ). Any impracticability caused by the failure of presupposed conditions only affected part of Cosden's ability to perform. Therefore, Cosden was required to allocate its product in a fair and reasonable manner. See Sec. 2.615(2) & comment 11; Roth Steel Products v. Sharon Steel Corp., 705 F.2d 134, 151 & n. 38 (6th Cir.1983). The jury, however, found that Cosden did not make a fair and reasonable allocation under the circumstances. By failing to allocate, fairly and reasonably, general purpose polystyrene to Helm, Cosden lost its ability to invoke the benefits of section 2.615(1). See J. White & R. Summers, supra, Sec. 3-9 at 134; Wallach, The Excuse Defense in the Law of Contracts: Judicial Frustration of the U.C.C. Attempt to Liberalize the Law of Commercial Impracticability, 55 Notre Dame Law. 203, 224-25 (1979); Note, Uniform Commercial Code Sec. 2-615(b); Duty to Allocate in a Shortage Economy, 14 Suffolk U.L.Rev. 1136, 1146-48 (1980). The district court erred by requiring the jury to determine the amount of polystyrene that Cosden should have allocated and by not granting Helm damages for the entire amount of general purpose due under orders 05 and 07. The record shows that Cosden sold general purpose polystyrene to other customers during the period in dispute and that, despite the difficulties that Cosden was experiencing, it had inventory and the production capability with which it could have provided Helm with an allocation of polystyrene. 53 We decline to accept Cosden's argument that its liability for undelivered polystyrene should not extend beyond the quantity that it should have fairly and reasonably allocated. Otherwise, sellers whose partial performance has been rendered impracticable would have no incentive to treat all of its customers equitably. Were we to adopt Cosden's suggested rule, a seller encountering unexpected problems could favor certain buyers at the expense of other customers, confident that any liability it incurred would be limited by the reasonable amount it should have allocated.