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Contracts Keyed to Calamari
Eastern Airlines, Inc. v. McDonnell Douglass Corp.
Facts
The Plaintiff, Eastern Airlines, Inc. (the "Plaintiff"), entered into a contract with the Defendant, McDonnell Douglas (the "Defendant"), to purchase 100 airplanes. A provision in the agreement excused the Defendant's delays if the delays were beyond their control. As the provision makes clear, the delays contemplated included, but were not limited to acts of government. The Excusable Delay clause stated "Seller shall not be responsible nor deemed to be in default on account of delays in performance . . . due to causes beyond Seller's control and not occasioned by its fault or negligence, including but not being limited to . . . any act of government, governmental priorities, allocation regulations or orders affecting materials, equipment, facilities or completed aircraft, . . . failure of vendors (due to causes similar to those within the scope of this clause) to perform their contracts . . . , provided such cause is beyond Seller's control." The United States Defense Department "jawboned" or informally demanded the Defendant into filling their orders for airplanes first. They did so with a subtle threat that if they did not comply a formal directive would be issued under the Defense Production Act (the "D.P.A."), which consequently would give the government's orders priority. Because the Defendant had to fill the government's orders first, the Plaintiff's orders were delayed. The trial court awarded the Plaintiff substantial damages and the Defendant appealed.
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