Contracts Keyed to Dawson
Austin Instrument, Inc. v. Loral Corporation
Defendant was awarded a contract by the Navy to build radar sets. Defendant thereafter solicited bids for 40 components needed in the production of the radar sets. Plaintiff was awarded a subcontract to supply 23 of the parts. Subsequently, Defendant was awarded a second Navy contract for the production of radar sets and again solicited bids for components. Plaintiff bid on all 40 parts, and Defendant told Plaintiff’s president that Plaintiff would only be awarded the subcontract for items on which it was the low bidder. Plaintiff refused to accept the order for less than all 40 of the components and informed Defendant that it would cease deliveries of the components due under the existing subcontract unless Defendant agreed to substantial price increases to the existing agreement and placed the order for all 40 parts. Defendant attempted to fill its needs with other suppliers, but none could produce the parts in the time needed. By letter, Defendant acceded to the Plaintiff’s demands.
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