William C. Atwater & Co. v. United States

Background

A coal supplier contracted with the Navy Department to deliver coal at Hampton Roads for the fiscal year, with an estimated quantity of 200,000 tons at $2.80 per ton. The Department later called for about ten percent more. The supplier said it could not meet extra tonnage because of car and labor shortages and cited a contract note that excuses nonperformance in such events. In the end the supplier delivered 219,990.4 tons, billed most tons at the contract price, billed 8,219 tons at a higher rate, and sued seeking payment at the market price for the excess coal.

Reasoning

The key question was whether the supplier was bound to furnish the extra coal at the contract price. The Court relied on the contract language and prior authority to conclude the Navy was entitled to call for more or less than the estimated quantity and that the contract became binding to the extent performed. The supplier had acquiesced in the Department’s interpretation, accepted orders, and billed accordingly. The Court held the contract’s shortage-relief note did not change price obligations, so the supplier could not recover the higher market price for the delivered tons.

Real world impact

The decision means a government buyer may enforce a written contract price for ordered supplies even when actual delivery exceeds an estimate and a supplier later cites transport shortages. Clauses excusing failure to deliver may cancel obligation, but they do not by themselves raise the price for coal already ordered and accepted. The Court affirmed the lower court judgment against the supplier.