non-delivery

Richard Oloffson, doing business as Rich's Ag Service, entered into an agreement with Clarence Coomer on April 16, 1970, under which Coomer would sell and deliver 40,000 bushels of corn to Oloffson in October and December 1970. Oloffson described the deal as two separate contracts of 20,000 bushels each, priced at $1.12 3/4 per bushel for delivery by October 30 and $1.12 1/4 per bushel for delivery by December 15. Coomer confirmed the total quantity but stated he would deliver as much as possible by October 30 with the remainder by December 15. On June 3, 1970, Coomer notified Oloffson that he would not plant corn that season because of excessive wetness and instructed Oloffson to secure the corn from another source if Oloffson had commitments to third parties. The market price for corn for future delivery stood at $1.16 per bushel on that date. When Oloffson contacted Coomer again in September 1970 regarding the corn, Coomer repeated that delivery would not occur. Oloffson mailed confirmations of the April agreement to Coomer and had his attorney demand performance, but Coomer did not respond to either communication. Following the passage of both October 30 and December 15 without any deliveries, Oloffson obtained replacement corn by purchasing 20,000 bushels at $1.35 per bushel and 20,000 bushels at $1.49 per bushel. Oloffson brought suit against Coomer in the circuit court of Bureau County. After a trial without a jury, the court entered judgment for Oloffson in the amount of $1,500 plus costs. Oloffson appealed the judgment to the Illinois Appellate Court for the Third District.

Eastern Air Lines, Inc. and Gulf Oil Corporation maintained a business relationship spanning several decades involving the sale and purchase of aviation fuel. On June 27, 1972, following months of arm's length negotiation, the parties executed a contract under which Gulf agreed to supply Eastern's requirements of jet fuel at specified cities in the Eastern system through January 31, 1977. The agreement was Gulf's standard form aviation fuel contract and incorporated a price escalation clause tied to the average of the posted prices for West Texas sour crude oil 30.0-30.9 gravity as listed for Gulf, Shell, and Pan American in Platt's Oilgram Crude Oil Supplement. The contract price mechanism operated against the backdrop of U.S. government price controls in effect from 1972 through the fall of 1973. In late 1973 the Arab oil embargo occurred. OPEC unilaterally increased the price of their crude to the world market some 400% between September, 1973, and January 15, 1974. This triggered implementation of two-tier price controls under which old oil remained frozen at controlled levels while new and released oil prices rose from approximately $5 to $11 per barrel. Platt's continued publishing only the controlled old oil postings for West Texas Sour, and Eastern paid contract prices that rose from 11 cents to 15 cents per gallon. On March 8, 1974, Gulf demanded that Eastern accept a price increase or face cutoff of jet fuel supplies within fifteen days. Eastern filed its complaint in the United States District Court for the Southern District of Florida alleging breach and seeking preliminary and permanent mandatory injunctions. By agreement of the parties a preliminary injunction preserving the status quo was entered on March 20, 1974, requiring Gulf to continue performance and Eastern to pay according to contract terms pending final disposition. Gulf answered and asserted that the contract lacked mutuality, was not a binding requirements contract, and was commercially impracticable. At trial the parties presented evidence concerning Eastern's fuel liftings at Gulf stations, which varied daily, weekly, and monthly due to weather, schedules, aircraft loads, and fuel freighting practices that Gulf had accepted without objection over thirty years of dealing. Gulf introduced evidence of its increased crude oil costs, including intra-company transfer prices that incorporated profits from its overseas and domestic production subsidiaries, while the record showed Gulf recorded net profits after taxes of approximately $800 million in 1973 and more than $1.065 billion in 1974.