Business law is important in the learning and protection of the business interests. The rule
of law determines the business ethics and ways of avoiding business related penalties. Business
law provides guidance in all the sectors of the business. It enables promotes awareness of the
expectations in business dealings and transactions as well as protecting against infringement of
the property rights by the government. The rule of law in the US allows businesses
familiarization with the government systems and the jurisdictions. Business law governs the
procedures and terms of contracts between corporations, business and even merchants.
All forms of businesses depend on the business contract law to enhance enforcement of
contracts and deal with those who fail to honor the terms of the contract. Besides, the rule of law
is crucial in the business sector particularly in contracts and promotion of fair markets. For
instance, enactment of antitrust legislation by the congress prevents unfair business practices
such as price fixing and colluding. The consumer protection law, tort law and the intellectual
property law are important especially in the field of marketing. All marketers should adhere to
them. People, companies or corporation should adhere to the contract laws especially when they
are in a contract or any form of legal agreement.
The parties before the Supreme Court in this case were the General Dynamics
Corporation and the United States government representing the navy. The counsels represented
both parties in the court. The main problem was failure of the General Dynamics Corporation to
honor a contract with the navy. The General Dynamics and the Boeing Corporation entered an
agreement with the US navy requiring them to develop a carrier based stealth fighter plane. They
failed to honor the contract and consequently prompted the government to terminate it. However,
the companies as the petitioners cited their failure to honor the terms of agreement due to failure
CASE LAW ANALYSIS-CONTRACT LAW 3
of the navy to provide the secret technology details concerning the stealth fighter (
The contract law formalizes the agreement between the parties and their subjects. In case
of a dispute, it must be applied in resolution without favor. The parties to the contract have an
element of mutual consent and fully understand the contents of their agreement and commit
themselves to the terms and conditions of the contract (Lax, J. R., & Cameron, 2007). In such
case, the general dynamics and the Boeing corporations had committed themselves to the
development of the stealth fighter and the navy had to provide necessary details and support until
the end of the contract.
The general dynamics and the Boeing Corporation had a disagreement based on the
contract terms, which took them to the Supreme Court. The companies attributed their failure to
complete the contract to the lack of fine details on secret technology from the navy. The general
dynamics company wanted damage payments amounting to $ 1.2 million from the navy while
the navy wanted a return of $1.35 from the company’s work it never approved.
The court’s ruling was unanimous without any dissenting opinion. They argued that the
review of the contract disputes by the judiciary was not possible due to the nature of the contract.
The contract involved sensitive information on the state’s secret technology. The US Court of
appeals for the federal circuit made a ruling that indeed the navy had the right and powers to
cancel the contract as the companies involved in the contract did not fulfill their contractual
obligations (Court, S.,2002).
The court justified the claims of the government that termination of the contract by the
government was for convenience. The ‘states secrets privilege’ applied rather than the contract
CASE LAW ANALYSIS-CONTRACT LAW 4
law due to the nature in the ruling of the court. The court dismissed a valid prima facie
affirmative in the case. I agree with the court’s decision because matters regarding the states
secrets are very sensitive. The navy had a right to deny the General Dynamics and Boeing
corporation secret technology information in the contract.
CASE LAW ANALYSIS-CONTRACT LAW 5
Cases – 2011 term | The Oyez Project at IIT Chicago-Kent College of Law. (n.d.).
Retrieved July 23, 2014,
Court, S. (2002). FindLaw: Laws: Cases and Codes: SUPREME COURT Opinions.
Lax, J. R., & Cameron, C. M. (2007). Bargaining and Opinion Assignment on the US Supreme
Court. Journal of Law Economics & Organization.
LII: Supreme Court Collection Home. (n.d.). Retrieved July 23, 2014,