Austin Instrument, Inc. v. Loral Corp.

35 A.D. 2d 387 (1970)

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Nature of the Case

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Facts

Austin (P) was awarded judgment for the full amount of a balance owing under subcontracts with Loral (D) including agreed upon price increases for the manufacture of precision gear parts for radars for the U.S. Navy. At the same trial, D brought a claim against P for economic duress in the extorting of price increases for the parts in the first subcontract. The Referee concluded that D had failed to establish its cause of action and dismissed the complaint. D placed an order with P in 1965 for the equipment. After P started the contract, D got an additional contract from the government. P then demanded retroactive price increases and also demanded the right to supply the new contract as well. Talks regarding the price increases and the second contract continued for weeks until July 1966 when P stopped all work unless D agreed to its price demands and for future contracts. D did receive deliveries of the parts covered in the first contract. A two-week vacation was about to start in P’s plant in the latter part of July. D wrote a self-serving letter that P had defaulted under the contract and that because of the drastic consequences if it defaulted under the Navy contract, it had to agree to P’s terms. D issued revised purchase orders and also sent another self-serving letter regarding duress. D based its claim against P that it was obliged to yield and capitulate to P’s demands because of a fear of liability for breach. D at no time was under any pressure for deliveries under the contract nor from any penalties from its base contracts for failure to deliver.