Harris Corporation v. National Iranian Radio & Television

Harris (plaintiff) contracted to sell 144 radio transmitters to National Iranian Radio & Television (NIRT) (defendant), backed by a letter of credit from Bank Melli payable to NIRT if Harris failed to perform, itself backed by a second letter of credit from Continental Bank payable to Melli. Harris shipped 138 of the transmitters, but the Iranian revolution prevented delivery of the remaining six even as the parties kept negotiating; once Iranian militants seized the U.S. embassy and took hostages, NIRT cut off communication with Harris and, along with Melli (both Iranian government-owned), sought to collect on the letters of credit anyway. Harris sued to enjoin payment, arguing the contract had terminated under a force-majeure clause covering events like the revolution and that NIRT's payment demand was fraudulent under the circumstances; the district court granted a preliminary injunction, and NIRT appealed.