1. On what basis did the court deny Harriscom’s claim of breach of contract against RF Systems? 

2. How much “government interference” should be required to invoke a force majeure clause? 

3. Who should bear the risk in transactions with customers in risky locations such as Iran, the seller or the buyer? 

RF Systems, a division of Harris Corporation, manufactures radio communications products in New York. It appointed Harriscom, a Swedish firm, as its exclusive distributor to the Islamic Republic of Iran. The contract contained a force majeure clause. In 1985, the U.S. Customs Service detained a shipment of radios ordered by Harriscom and bound for Iran. The government prohibited all sales to Iran of goods it categorized as military equipment. In 1986, RF Systems negotiated a compromise under which it agreed to “voluntarily withdraw from all further sales to the Iranian market.” Harriscom brought this action for a breach of contract against RF Systems. The District Court granted judgment for the defendants on the basis of commercial impracticability and force majeure, and the plaintiff appealed. 

One of the issues before us is whether the manufacturer’s refusal to ship the spare parts was a voluntary act on its part, subjecting it to liability to its distributor for damages for breach of contract. We think it a foregone conclusion that a government bureaucracy determined to prevent what it considers military goods from leaving this country and with the will to compel compliance with its directives is an irresistible force, one that cannot reasonably be controlled. The government in these circumstances may be likened to the wife of “Rumpole of the Bailey,” John Mortimer’s fictional barrister, who describes his wife as “she who must be obeyed.” … What appellant ignores is the overwhelming and uncontradicted evidence that the government would not allow RF Systems to continue sales to Iran. RF Systems established the affirmative defense of commercial impracticability because it complied in good faith with the government’s informal requirements. Further, for RF Systems to have failed to comply would have been unusually foolhardy and recalcitrant, for the government had undoubted power to compel compliance. Like commercial impracticability, a force majeure clause in a contract excuses nonperformance when circumstances beyond the control of the parties prevent performance. The contracts between these parties specifically contained force majeure clauses to excuse RF Systems’ performance under the present circumstances, namely, “governmental interference.” 

Decision. Summary judgment for the defendant, RF Systems, was affirmed. The force majeure clause in the distributorship agreement excused the manufacturer from performance on the grounds of “government interference.”