Loral Corporation had a contract with the U.S. government to manufacture radar s

Question

Loral Corporation had a contract with the U.S. government to manufacture radar sets. Loral

subcontracted with Austin Instrument for the production of precision parts to be used in the

radar sets. In the middle of production, Austin told Loral that it would deliver no more parts unless Loral agreed to pay Austin a good deal more than originally agreed upon. Loral could not obtain the same parts in time from any other company. As a result, Loral agreed to the price

increase. After delivering the radar sets, Loral sued Austin and asked the court to rescind the

price increase. Did the court grant Loral’s request? Explain.

Explanation / Answer

Yes, under the legal remedies for the Breach of Contracts the court may order Restitution against Austin.

Restitution: In Loral vs Austin, Austin breached the contract by stalling the delivery of the precision parts at the last moment, crucial for Loral to complete its order of radar sets by demanding higher deal money, than originally agreed upon. Loral agreed pay him more to save and fulfill his contract of radar sets. But, since this is a breach of contract by Austin, the court may call for restitution, which means, it can order Austin to repay Loral back. In this case the court may rescind the price increase.

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