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Contracts Keyed to Whaley
Nissho-Iwai Co. v. Occidental Crude Sales
Citation:
United States Court of Appeals, Fifth Circuit, 1984. 729 F.2d 1530.Facts
Nissho-Iwai Co. (Plaintiff) entered into a contract with Occidental Crude Sales, Inc. (Defendant) for crude oil. The parties’ contract contained a “force majeure” provision which excused defendant’s performance for events defendant could not reasonably control. Defendant acquired its oil from wells in Libya. During the contract period, the Libyan government started to affect defendant’s production, so defendant withheld $117 million that it owed to the Libyan government. Subsequently, in 1975, the government placed an embargo on oil exports. During the embargo, defendant discovered sand in its oil pipeline which required the pipeline to be shut down until May 1976. Consequently, for 8 months plaintiff did not receive any oil.
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