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Eastern v Gulf - indefinite and it renders Gulf subject to...

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Class Notes Case: Court / Date: Judge: Facts: Issue: Holding: Procedural History: Rule: Rationale: Eastern Airlines v. Gulf oil Co. Us Dis Ct, Southern FL (1975) James Lawrence King Eastern ( π ) and Gulf( ) signed an agreement renewing a contract which, as amended, was to provide the basis upon which Gulf was to furnish jet fuel to Eastern at certain cities in the Eastern system. They based their pricing on posted going rates of crude oil. Due to “two-tier” pricing, and the oil embargo, Eastern was paying the lower tier price of crude oil set by government regulations because this is what was listed in the posting that they based the contract price upon. Consequently, Gulf tried to raise the price on Eastern to reflect the higher tier price, and Eastern filed suit against Gulf. Eastern was granted a preliminary injunction to keep the price as according to the contract until litigation was completed. Gulf states that the contract lacks mutuality of obligation, it is vague and
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Unformatted text preview: indefinite, and it renders Gulf subject to Eastern’s whims concerning amount of jet fuel. Plaintiff 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. 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. Alleging breach of contract, plaintiff airline sought injunctive relief from the district court (Florida) requiring defendant oil company to specifically perform requirements contract to supply aviation fuel, despite defendant's assertion of the commercial impracticability doctrine of the Uniform Commercial Code, U.C.C. § 2-615....
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