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Contracts Keyed to Marshall
Austin Instruments, Inc. v. Loral Corporation
Citation:
272 N.E.2d 533 (1971)ProfessorMelissa A. Hale
CaseCast™ – "What you need to know"
Facts
In July of 1965, Loral was awarded a $6,000,000 contract by the Navy for the production of radar sets. The contract contained a schedule of deliveries, a liquidated damages clause applying to late deliveries and a cancellation clause in case of default by Loral. The latter thereupon solicited bids for some 40 precision gear components needed to produce the radar sets, and awarded Austin a subcontract to supply 23 such parts. That party commenced delivery in early 1966. In May, 1966, Loral was awarded a second Navy contract for the production of more radar sets and again went about soliciting bids. Austin bid on all 40 gear components but, on July 15, a representative from Loral informed Austin’s president, Mr. Krauss, that his company would be awarded the subcontract only for those items on which it was low bidder. Shortly thereafter, Austin did, indeed, stop delivery.
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Defenses to Formation