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Fairchild Stratos Corp. v. Lear Siegler, Inc.

United States Court of Appeals for the Fourth Circuit
337 F.2d 785 (1964)


Facts

The Hufford division of Lear Siegler, Inc. (Hufford) (defendant) contracted to make a sophisticated press machine for Fairchild Stratos Corporation (Fairchild) (plaintiff) to use in making pleasure-boat hulls. Unbeknownst to Hufford, Fairchild also contemplated other uses for the press. Hufford missed the July 1960 contractual deadline. When Hufford delivered the press in September 1960, the press did not work. Hufford promised to correct the problem by April 7, 1961. Fairchild did not hold Hufford to that date but set a final and absolute deadline of June 1, 1961. However, before that date arrived, Fairchild decided it could not use the press for other products, as previously contemplated, and privately decided to back out of the contract. When Hufford missed the June 1 deadline by a few days, Fairchild rescinded the contract and sued Hufford. The federal district court ruled that Hufford was in material breach of the contract as of June 1, 1961. The first part of the court’s award of damages covered Fairchild’s contract-related expenses. The second part allowed Fairchild to recover the expenses it paid to settle lawsuits filed by disappointed boat vendors. Hufford appealed to the Fourth Circuit.

Rule of Law

Issue

Holding and Reasoning (Bell, J.)

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