CIT entered into a sale/leaseback contract with Condere Tire Corporation for 11
ID: 2490069 • Letter: C
Question
CIT entered into a sale/leaseback contract with Condere Tire Corporation for 11 tire presses at Condere's tire plant in Natchez, Mississippi. Condere ceased making payments on these presses owned by CIT, and Condere filed for Chapter 11 bankruptcy. CIT thereafter contracted to sell the presses to Specialty Tires Inc., for $250,000. When the contract was made, CIT, Condere, and Specialty Tire believed that CIT was the owner of the presses and was entitled to immediate possession. When CIT attempted to gain access to the presses to have them shipped, Condere changed its position and refused to allow the equipment to be removed from the plant. When the presses were not delivered, Specialty sued CIT for damages for nondelivery of the presses, and CIT asserted the defense of impracticability. decide. [Specialty Tires, Inc. v. CIT, 82 F. Supp. 2d 434 (W.D. Pa.) ]
Explanation / Answer
Facts of this csse are as follows:
CIT purchased 11 tire presses form Condere Tire Corporation and leased back to Condere by retaining ownership on the presses and right to possession in case of default on the part of Condere. Latter Condere ceased lease payments to CIT and filed for Chapter 11 bankruptcy.
In another agreement, Specialty agreed to buy these presses from CIT for $250,000. When the contract was made all the three paties viz. Condere, CIT and Specialty beleived that CIT was the owner fo the pressesse and was entitled to immediate possession. When CIT attempted to gian access to tehpresses to have them shipped to Specialty Tires Inc., all of a sudden Condere changed its position and refused to allow the euipment to be removed from the plant. When the presses were not delivered, Specialty sued CIT for damaes for nondeliery of the presses and CIT asserted teh defence of Impracticability ie. imposibiltity of performace
Traditionally, Impracticability arise due to death of a promisor, illegality of contract and destruction of subject matter, but in this case either of these not happened, beyond the above three, here impossibiltiy in the sense that delivery of presses is not in the control of defendent, but it is temporary, after the obstacles of delivery gone, the CIT should deliver presses to Specialty.
Here, the right of ownership and repossession of presses on the default of Condere is reserved by CIT, Condere arguments like CIT has no right to remove the presses from the Condere plant is baseless.
Specialty, for not gettng the deliver of presses from CIT in time, can claim any liquidated damages from CIT. CIT can take possession of presses and can deliver to Specialty, CIT can not make a claim of commercial impracticability in deivering the presses to Specialty.