E. Air Lines, Inc. v. Gulf Oil Corp.

415 F. Supp. 429 (S.D. Fla. 1975)

 

RULE:

For the Uniform Commercial Code, U.C.C. § 2-615, to apply, there must be a failure of a pre-supposed condition, which was an underlying assumption of the contract, failure was unforeseeable, and the risk of which was not specifically allocated to the complaining party. The burden of proving each element of claimed commercial impracticability is on the party claiming excuse.

FACTS:

An airline brought action against an oil company for breach a longstanding requirements contract to supply aviation fuel.The airline sought injunctive relief requiring specific performance of the contract in spite of an embargo by oil-producing nations that had raised crude oil prices. The oil company, however, sought to repudiate the contract by invoking the commercial impracticability doctrine of the Uniform Commercial Code, U.C.C. § 2-615. The airline still contended that it was entitled to specific performance because both parties knew an embargo was imminent, and they had tied the contract price to domestic postings in an oil publication. 

ISSUE:

Should injunctive relief be granted?

ANSWER:

Yes

CONCLUSION:

The court agreed and granted injunctive relief, because commercial impracticability was not a defense where there was no evidence that defendant was losing money. Rather, the evidence showed that defendant was making a profit and its losses were merely paper losses.

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