Westinghouse Electric Corporation entered intouranium supply contracts with 22 electric utilitiesduring the late 1960s. The contract prices rangedfrom $7 to $10 per pound. The Arab oil embargoand other changes in energy resources caused theprice of uranium to climb to between $45 and $75per pound. Supply tightened because of increaseddemand. In 1973, Westinghouse wrote to the utilitiesand explained that it was unable to perform on itsuranium sales contracts. The utilities needed ura-nium. Westinghouse did not have sufficient funds tobuy the uranium it had agreed to supply, assumingthat it could find a supply. One utility executivecommented, after totaling up all 22 supply contracts, that Westinghouse could not have supplied the ura-nium even under the original contract terms. Hesaid, Westinghouse oversubscribed itself on thesecontracts. They hoped that not all the utilities wouldtake the full contract amount. Westinghouse says it is impossible for it to per-form. The utilities say that they are owed damagesbecause they must still find uranium somewhere. What damages would the law allow?
What ethical issues do you see in the original contracts and in Westinghouse’s refusal to deliver?
Should we excuse parties from contracts because it is so expensive for them to perform?
[In re Westinghouse Uranium Litigation, 436 F Supp 990 (ED Va)]