Atlas Shipping Inc is a shipping company that agreed to transport goods by ship for Everest Industries Inc from Florida to Peru

Question

Atlas had planned to take its ship through the Panama Canal and the journey would take 7 days and the charge to Everest was $10,000. Everest paid $10,000 in advance. The Panama Canal however was closed due to an earthquake. It was still possible to get from Florida to Peru by ship but it would mean having to travel down the east coast of South America and then up the west coast to Peru. It would take over 3 weeks and the cost of this would be $40,000. As a result

A) Atlas can claim the contract was frustrated and must return the $10,000
B) Atlas can claim the contract was frustrated but keep $1,000
C) Everest can insist Atlas still ship the goods via the longer route, but would have to pay $40,000
D) Everest can insist Atlas still ship the goods via the longer route and would not have to pay any more than the $10,000 it had already paid
E) Everest can insist that Atlas get the goods to Peru using truck or rail transportation

Answer 1

D