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Austin Instrument, Inc. v. Loral Corp.

Supreme Court of New York
316 N.Y.S.2d 528 (1970)


Facts

Loral Corp. (Loral) (defendant) placed orders for the purchase of gear parts and assemblies needed for Navy radars with Austin Instruments (Austin) (plaintiff). Subsequently Loral was awarded an additional government contract for radar equipment. Austin offered to supply the parts needed for this contract as well, but demanded retroactive price increases on the first contract and the right to furnish similar parts on the second contract. Negotiations began and continued without successful resolution of the dispute. Austin stopped work on the first contract and refused to continue unless Loral met its demands for the price increases and awarded it the second contract, although Loral did receive deliveries of parts manufactured under the first contract. Following a two-week vacation Austin allegedly stopped work and Loral wrote Austin a letter advising that it faced “drastic consequences” if it defaulted on its contract and that it had “no choice or alternative” but to meet Austin’s conditions. Austin filed suit when Loral failed to pay the balance due on the delivered parts.

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Issue

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Holding and Reasoning (Eager, J.)

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Dissent (Steuer, J.)

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