Austin Instruments, Inc. v. Loral Corp.

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Facts: Austin and Loral contracted that Austin would supply parts to Loral. Loral was in a contract with the Navy to supply radar devices. After it was too late for Loral to find a new sub-contractor in time to fulfill its contract with the Navy, Austin said it would stop deliveries unless Loral paid more and awarded it another sub-contract for parts (for which Loral had just won another contract with the Navy.) Loral agreed to Austin’s demands and awarded the second contract with Austin. Three days after the last delivery by Austin, Loral filed suit to recover the excess amount contracted for (for the first contract).

Issue: Is the contract enforceable?

Holding: No.

Reasons: There was duress from Austin because Loral had no other choice but to go along with their demands. Austin used coercion.