Eastern Air Lines, Inc. v. Gulf Oil Corp.
United States District Court for the Southern District of Florida
415 F. Supp. 429 (1975)
Gulf Oil (defendant) had a longstanding requirements contract to supply jet fuel to Eastern Airlines (plaintiff) at a price tied to a published index, but during the 1970s oil crisis Gulf repudiated the contract, arguing it lacked mutuality since Eastern practiced "fuel freighting" (adjusting city-by-city fuel purchases based on price), and that new government pricing policies made performance commercially impracticable. Trial evidence showed Gulf's profits actually rose in proportion to oil costs during the relevant period, its claimed cost increases were largely intra-company transfer costs, and its executives were in close, ongoing contact with the government officials who set the new pricing policy.
Whether a contract measuring quantity by a buyer's good-faith requirements is valid so long as the demanded quantity is not unreasonably disproportionate to any stated estimate or comparable prior demands, and whether a party may avoid contractual performance where market pricing conditions have simply made the contract less profitable.