Wendt Farm Equipment Co. V. International Harvest Co. United States Court of Appeals 1991 1) Facts a) The Plaintiff, Karl Wendt Farm Equipment Co. (Plaintiff), entered into a franchise agreement with the Defendant, International Harvester (Defendant), establishing Plaintiff as a dealer of Defendant’s farm equipment. The agreement specified the terms under which the contract could be terminated. Thereafter, the farm equipment market suffered a recession and the Defendant suffered substantial losses. The Defendant decided to sell its farm equipment division to J.I. Case Co. (Case) and Tenneco Co. (Tenneco). Case and Tenneco did not acquire Defendant’s franchise network, but it did receive access to the dealers, most of whom received a franchise from Case. Plaintiff did not receive a franchise from Case and therefore 2) History a) Plaintiff sued Defendant, claiming breach of contract for loss of his franchise. Defendant argued impracticability and frustration of purpose. A directed verdict was found for Plaintiff. 3) Issue a) Does the down turn of the market allow for the contract to stand under grounds of frustration or impracticability i) No. Judgment reversed and remanded to determine the question of damages.Although the Michigan Supreme Court recognizes the defense of impracticability, as a matter of law, this defense does not excuse performance due to mere economic difficulties, as in the instant case.In order for a supervening event to discharge a duty, the nonoccurrence of such event must have been a basic assumption of the parties when they made the contract. The continuation of existing market conditions and changing financial situations are not such assumptions.In order to use the doctrine of frustration of purpose to excuse performance, the purpose frustrated by the supervening event must have been the principal purpose of the contract, the frustration must have been substantial and the frustrating event must have been a basic assumption of the contract.The principal purpose in the instant case was to establish a dealership. It was not to provide mutual profitability. 4) Judgment: