Nissho-Iwai Co. v. Occidental Crude Sales
United States Court of Appeals for the Fifth Circuit
729 F.2d 1530 (1984)
Occidental's (defendant's) contract to supply crude oil to Nissho (plaintiff) contained a force majeure clause excusing performance for events beyond Occidental's reasonable control. Occidental withheld $117 million owed to the Libyan government, prompting a Libyan oil embargo, and separately delayed repairing a broken pipeline until after the embargo ended, then found sand requiring further shutdown, leaving Nissho without oil from October 1975 to May 1976. The jury was instructed that the force majeure clause required the excusing events to be beyond Occidental's reasonable control, and it awarded Nissho contract damages; Occidental appealed the instruction.
Whether a party will be excused from performance due to impossibility under a force majeure clause only if it shows the excusing event was beyond its reasonable control.