## Facts

- Eastern Air Lines entered long-term contracts (1965–1968) to purchase nearly 100 jet aircraft from Douglas Aircraft Company, later McDonnell Douglas Corporation (MDC), for roughly $500 million.
- The contracts included a broad excusable-delay clause excusing delays beyond the seller’s control, including “act of government” and “governmental priorities,” among other listed causes.
- During contract performance, Vietnam-era defense demands increased; the federal government, acting under the Defense Production Act (DPA) framework, often influenced production priorities through informal pressure (“jawboning”) rather than formal priority directives.
- MDC prioritized government and military work in response, and Eastern received many aircraft late; Eastern alleged 90 aircraft were delivered an aggregate 7,426 days late.
- Eastern accepted the aircraft and later sued (1970) seeking substantial damages for late delivery.
- MDC defended on contractual excusable delay, alternatively on UCC § 2-615 impracticability, and argued Eastern was barred by failure to give timely notice of breach under UCC § 2-607.

## Issues

1. Whether the excusable-delay clause required formal governmental priority orders, or also covered informal government pressure affecting production priorities.
2. Whether the trial court erred by requiring that excusing events be unforeseeable when the contract expressly listed governmental acts and priorities as excusing causes.
3. Whether the presence of an excusable-delay clause automatically meant MDC had “assumed a greater obligation” that precluded reliance on UCC § 2-615 impracticability.
4. Whether Eastern’s compliance with UCC § 2-607’s requirement of reasonable and timely notice of breach was a fact question that had to be submitted to the jury.

## Decision

- The Fifth Circuit reversed the judgment for Eastern and remanded for a new trial due to substantial and prejudicial errors in rulings and jury instructions.
- The court held the district court misconstrued the excusable-delay clause by effectively limiting it to formal DPA directives and by adding an unforeseeability requirement for expressly listed excusing events.
- The court held the district court improperly minimized or excluded MDC’s UCC § 2-615 impracticability defense by treating the excusable-delay clause as an automatic assumption of a greater obligation.
- The court held the district court erred by removing the UCC § 2-607 notice question from the jury based on the seller’s awareness of lateness; whether Eastern gave reasonable notice was for the jury on the conflicting evidence.
- Eastern’s cross-appeal regarding prejudgment interest did not prevent reversal and remand for a new trial.

## Legal Principles

- Express excusable-delay clauses allocating risk for “act of government” and “governmental priorities” may encompass informal but coercive government actions affecting production, not only formal directives, depending on the contract’s language.
- When a contract expressly enumerates excusing events, a court may not impose an additional unforeseeability condition inconsistent with the parties’ allocation of risk.
- UCC § 2-615 impracticability remains potentially available unless the seller, by contract, assumed a greater obligation; whether such assumption occurred requires careful contract interpretation and is not resolved by a categorical rule.
- Under UCC § 2-607(3), a buyer’s notice of breach requires more than the seller’s knowledge of the facts constituting breach; it concerns whether the buyer communicated that it regarded the performance as a breach and might seek a remedy.
- In long-term commercial relationships involving repeated performance and negotiations, the reasonableness and timeliness of notice under UCC § 2-607 commonly present fact questions for the jury informed by course of dealing and commercial good faith.

## Conclusion

The Fifth Circuit set aside a major late-delivery damages verdict because the jury was instructed under incorrect standards on contractual excusable delay, statutory impracticability, and the buyer’s notice obligation, and it ordered a new trial with those issues properly submitted to the jury under the contract and the UCC.


Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957 (5th Cir. 1976)