Document Type

Article

Comments

"Sales Law and Inflation," 50 University of Southern California Law Review 1 (1976)

Abstract

This Article initially set out to consider how unanticipated causes of price rises, of which inflation is a paradigm example, affected the enforceability of sales contracts. In fact, these causes traditionally have had no effect on the enforceability of sales contracts; courts required defaulting promisors to pay damages. Recent commentators, however, have argued that to impose on sellers all costs attributable to unanticipated events is unacceptably harsh. They are supported in this view by a comment to the Uniform Commercial Code (Code), which suggests unforeseeable cost increases should excuse sellers. Moreover, a few cases decided under the Code have excused sellers when events unexpectedly made performance more costly. The question of the effect unanticipated events should have on the enforceability is also an important question because is inflation, and this country apparently has failed to achieve domestic price stability. Section I of this Article briefly describes the cases. Section II analyzes the themes that apparently underlie the commentators' distaste for enforcement, and develops the only appealing case for excuse. Section III, however, shows that application of this case would require courts to make extraordinarily difficult factual inquiries and to engage in complex economic analysis. The confusions that inevitably arise when courts are required to do more than they can would here render judicial outcomes so uncertain as to impair contract stability. A concern to ensure contract stability, Section I concludes, thus explains and justifies the courts' decision to enforce. Section IV then argues that that decision is also anti-inflationary. Finally, Section V shows that the Uniform Commercial Code permits enforcement.

Date of Authorship for this Version

1976

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