Northern Indiana Public Service Co. v. Carbon County Coal Co.
United States Court of Appeals for the Seventh Circuit
799 F.2d 265 (1986)
NIPSCO's fixed-price contract with Carbon County included a force majeure clause and, after fuel costs rose, NIPSCO obtained regulatory permission to raise rates on condition it seek cheaper alternatives, which it then used to justify halting coal purchases; NIPSCO argued the contract was illegal under a mineral-lands statute and that performance should be excused, while Carbon County counterclaimed for damages and unsuccessfully sought specific performance.
Whether the defense of illegality is automatically applicable if a party to a lawful contract acts unlawfully in performing under the contract, and whether a party to a fixed-price contract may excuse performance for frustration of purpose or impossibility.