Revisiting Austin v. Loral: A Study in Economic Duress, Contract Modification and Framing

Austin Instrument, Inc. v. Loral Corp. is a favorite among Contracts casebooks because the New York Court of Appeals held that it was a "classic" example of economic duress. The close division of judicial opinion suggested, however, that there was a more complex story behind the Court of Appeals' recitation. Indeed, revisiting the case reveals a rich and intricate story. Why were Austin and Loral litigating so fiercely over roughly $22,000?

Was it possible that the threat of Austin, a small, privately held company, could coerce Loral, a large, publicly traded company? What influence did the conflict in Vietnam have on the decision? This article explores these questions, reconstructing Austin v. Loral. The article goes on to present the frames of contract modification and economic duress, and discusses the doctrinal differences between them at the time of Austin v. Loral.

This article concludes by refocusing the duress doctrine to ask solely whether Austin's threat was made in good faith.