ALUMINUM COMPANY OF AMERICA V. ESSEX GROUP, INC.
499 F.Supp. 53 (W.D of Pa. 1980)
NATURE OF THE CASE: This was a dispute over the smelting of aluminum.
FACTS: Alcoa (P) made a deal with Essex (D) for smelting aluminum. Part of the deal
included a price escalator clause keyed to the Wholesale Price Index. P contends that this
price barometer did not reflect actual changes in the cost of nonlabor items utilized by P
in the production of aluminum. P claims that there was a mutual mistake of fact and that the
contract was completely frustrated. The contract was to run from 1967 until 1983 with an
option for D to extend until 1988. The goal of the price index was to maintain a net income
of $.04 per pound of aluminum converted. The formula was sufficient until the OPEC actions
increased oil prices and P's electricity costs which grew much faster than the WPI. P claims
that D is reselling some of the product and that if the agreement were to be continued at
the present rate of losses. P would stand to lose $75,000,000.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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