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U.S. v. Wegematic

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Citation Edit

United States v. Wegematic Corp., 360 F.2d 674 (2d Cir. 1966) (full-text).

Factual Background Edit

The defendant, Wegematic, claimed "a truly revolutionary system utilizing all of the latest technical advances.”[1] After a lengthy series of delays, Wegematic asked to be relieved of its contractual obligations on the ground of practical impossibility due to "basic engineering difficulties," which would cost $ 1-1.5 million and take up to two years to. remedy.[2]

Appellate Court Proceedings Edit

The court rejected the excuse, stating:

We see no basis for thinking that when an electronics system is promoted by its manufacturer as a revolutionary breakthrough, the risk of the revolution's occurrence falls on the purchaser; the reasonable supposition is that it has already occurred or, at least, that the manufacturer is assuring the purchaser that it will be found to have when the machine is assembled.[3]

The agreement provided for $100 per day in liquidated damages for delay in delivery of the computer equipment.[4] The court of appeals upheld an award of $46,300 under this clause for Wegematic's delay.[5]

Wegematic had further agreed that if it failed to comply "with any provision"[6] of the agreement, the purchaser could "procure the services described in the contract from other sources and hold the Contractor responsible for any excess costs occasioned thereby.”[7] Based upon Wegematic's failure to deliver the equipment, the government purchased an IBM 650 computer. Wegematic was held liable for $179,450 the additional cost of the IBM equipment.[8]

ReferencesEdit

  1. 360 F.2d at 675.
  2. Id.
  3. Id. at 676.
  4. Id. at 675.
  5. Id. at 675.
  6. Id. at 675.
  7. Id.
  8. Id. at 675. An additional $10,056 in damages were awarded for "preparatory expenses useless in operating the IBM system." Id.

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