Austin Instrument, Inc. v. Loral Corp.
Court of Appeals of the State of New York
272 N.E.2d 533 (1971)
Austin Instrument, Inc. (Austin) (plaintiff) supplied precision gear components to Loral Corporation (Loral) (defendant) under a Navy radar subcontract, then, after winning a second Navy subcontract elsewhere and being denied all 40 components on the new contract, refused to keep delivering under the first subcontract unless Loral agreed to substantial retroactive price increases. Loral called ten other manufacturers and found none that could deliver in time to avoid breaching its own Navy contract, so it agreed to Austin's price increases under protest, and Austin completed delivery. After fulfilling both Navy contracts, Loral refused to pay the increases, claiming economic duress; the trial and appellate courts sided with Austin, and Loral appealed.
Whether a contract is voidable on the ground of economic duress when the party making the claim was forced to agree by a wrongful threat precluding the exercise of free will.