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Nissho-Iwai Co. v. Occidental Crude Sales
United States Court of Appeals for the Fifth Circuit
729 F.2d 1530 (1984)
Nissho-Iwai Co. (Nissho) (plaintiff) entered into a contract with Occidental Crude Sales (Occidental) (defendant) that required Occidental to provide Nissho with crude oil. The contract contained a “force majeure” provision that excused Occidental’s performance for events that Occidental could not reasonably control. Occidental acquired its oil from wells in Libya. In 1975, Occidental began having disagreements with the Libyan government and withheld $117 million owed to the Libyan government. As a result from October 1975 to December 1975, the Libyan government placed an embargo on oil exports. During this time, Occidental found a breakdown in one of the pipelines, but waited to fix the pipeline until after the embargo was over. Following the embargo, Occidental discovered sand in the pipeline requiring the pipeline to be shut down until May 1976. Consequently, from October 1975 to May 1976 Nissho did not receive any oil. Nissho sued for breach of contract. The trial court instructed the jury that in order for the “force majeure” provision in the contract to excuse Occidental’s performance, the excusing events must be out of Occidental’s reasonable control. The trial court awarded contractual damages to Nissho. Occidental appealed arguing that the jury instruction was incorrect.
Rule of Law
Holding and Reasoning (Goldberg, J.)
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