Roth Steel Products v. Sharon Steel Corp.
United States Court of Appeals, Sixth Circuit
705 F.2d 134 (1983)
Roth Steel Products (plaintiff) had a fixed-price steel supply contract with Sharon Steel (defendant) through the end of 1973, but after market prices and demand spiked in early 1973, Sharon told Roth it would raise prices and threatened to cut off supply entirely unless Roth agreed to pay more; Roth, having no reasonable alternative supplier, reluctantly agreed. Sharon later reserved large amounts of steel for a subsidiary at premium prices while blaming late deliveries to Roth on raw-material shortages. The trial court found Sharon had acted in bad faith by using its position as Roth's chief supplier to coerce the price modification, held the modification unenforceable, and awarded Roth damages; Sharon appealed.
Whether a merchant party to a contract may seek contract modification only by acting in good faith -- meaning conduct consistent with reasonable commercial standards of fair dealing and motivated by an honest desire to address genuine commercial exigencies.