November 09, 2018

In Brief

John R. Jacus

Breach of contract

Shell Oil Co. v. U.S., No. 17-1695 (Fed. Cir. July 18, 2018). 
The U.S. Court of Appeals for the Federal Circuit affirmed an award of damages by the U.S. Court of Claims to a group of oil companies for a breach of contract by the United States with respect to their World War II-era production of aviation gasoline or “avgas” fuel for the war effort. The Federal Circuit had previously ruled that the United States did breach its contract with the appellant oil companies, which had agreed to work around the clock to provide the fuel for U.S. armed forces aircraft. The claims at issue were based on contracts entered in 1942 and 1943 for the production of avgas, which resulted in large volumes of acid sludge waste being generated at the appellants’ refinery sites. The United States argued that the Court of Claims had wrongly awarded damages, but the Federal Circuit disagreed, finding that appellants had proffered unrebutted evidence showing damages incurred by them as a result of the breach. The appellate court also held that the amount of acid sludge and other wastes attributed to the contracts in question was properly determined by the court below.


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