In February 1965, as part of a mass modernization of its fleet, Eastern Air Lines entered into a contract to with Douglas to purchase 90 DC-9 and 10 DC-8 aircraft. The deal was worth half-a-billion dollars (about $4 billion today). The contract specified the exact delivery dates for each of the aircraft: the deliveries were scheduled to take place between May 1966 and January 1969.

By February 1966, however, it became clear to Douglas that it would not be able to complete the planes by the specified dates. With the growing involvement of the US in Vietnam, the US Defence Department had legally mandated that all defence contractors (a group that included Douglas and most of its subcontractors) give priority to military projects over civilian ones. As a result Douglas faced two problems: a shortage of skilled personnel to work on manufacturing civil aircraft (Douglas made its civil aircraft in Southern California, where a number of other aerospace companies were located), and delays in component deliveries as its subcontractors were diverted to military work. Douglas wrote to Eastern, informing them of the delays; Eastern wrote back that it viewed the delays with "great concern" and that the deliveries placed a "substantial burden" on airline. On average, each plane was delivered 80 days later than its originally scheduled delivery date. In May 1969, after the delivery of the last aircraft, Eastern Airlines sued Douglas for $25 million, the losses it allegedly incurred as a result of the delays. If you were the judge in this case, would you have awarded Eastern Airlines damages? Why or why not? Assume that the initial contract did not specify penalties for the delays