Government Contracts-Adoption of Uniform Commercial Code as the Applicable Federal Law in an Action for Breach of Government Contract-United States v. Wegematic Corp.

Appellant contracted to supply the Federal Reserve Board with a “truly revolutionary” electronic digital computing system. After twice requesting postponement of the delivery date, appellant informed the Board that delivery under the terms of the contract would be impracticable because of unforeseen engineering difficulties that would require at least one year and one million dollars to overcome. Appellant asked for cancellation of the contract, but the Board refused and brought a suit for damages. Both parties conceded that federal law governed the action; appellant, however, argued that section 2-615 of the Uniform Commercial Code (Code) should be adopted as the controlling federal law of sales. This section excuses a default on a contract when the failure of presupposed conditions makes performance impossible. The federal district court rendered judgment for the United States. On appeal to the Second Circuit, the court adopted section 2-615 of the Code as the controlling federal law, but held, affirmed. Section 2-615 of the Code does not relieve appellant from a default when appellant has promoted its product as a revolutionary breakthrough, expressly agreed to liquidated damages in case of late performance, authorized the Board to resort to other manufacturers in the event of non-delivery, and has not presented sufficient evidence of the failure of presupposed conditions.