Case Citation
Legal Case Name

Hughes Communications Galaxy, Inc. v. United States, Defendant-Cross Case Brief

Court of Appeals for the Federal Circuit2001Docket #236629
271 F.3d 1060 46 U.C.C. Rep. Serv. 2d (West) 453 2001 U.S. App. LEXIS 24358 2001 WL 1403481

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Case Brief Summary & Legal Analysis

General Brief
4 min read

tl;dr: After NASA breached a contract to launch Hughes’s satellites, Hughes procured more expensive launches using different rockets and newly designed satellites. The court affirmed a damage award based on these substitute launches, finding them to be commercially reasonable cover.

Legal Significance: This case clarifies that under the contract remedy of “cover,” substitute performance need not be identical to the original. A non-breaching party may recover the increased costs of a commercially reasonable substitute, even if that substitute is a different or more advanced product or service.

Hughes Communications Galaxy, Inc. v. United States, Defendant-Cross Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

In 1985, Hughes Communications Galaxy, Inc. (Hughes) and NASA entered into a Launch Services Agreement (LSA), in which NASA agreed to use its “best efforts” to launch ten of Hughes’s HS-393 satellites on the Space Shuttle. Following the 1986 Space Shuttle Challenger disaster, the U.S. President announced that NASA would no longer launch commercial satellites. NASA subsequently breached the LSA. To launch its satellites, Hughes was forced to use more expensive expendable launch vehicles (ELVs). Hughes launched three of its HS-393 satellites on ELVs but also developed and launched a new, more powerful HS-601 satellite, which was better suited for ELV launches. Hughes sued the United States for breach of contract. The Court of Federal Claims found the government liable and, in the damages phase, determined that NASA’s best efforts would have resulted in five launches. It awarded Hughes damages based on the increased cost of these five launches, using the HS-601 launches as a reasonable substitute for two of the launches that would have occurred under the LSA. The government appealed, arguing that the HS-601 launches were not a proper basis for cover damages because they involved a different, non-contracted-for satellite.

Court Holding & Legal Precedent

Issue: In calculating cover damages for a breach of a service contract, may a court base the award on the costs of procuring substitute services that are not identical to, but are a commercially reasonable substitute for, the services originally promised?

Yes. The court affirmed the damage award, holding that the launch of Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit

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Legal Issue

In calculating cover damages for a breach of a service contract, may a court base the award on the costs of procuring substitute services that are not identical to, but are a commercially reasonable substitute for, the services originally promised?

Conclusion

The case establishes that the standard for cover in service contracts is Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis

Legal Rule

When a seller breaches a contract for services, the buyer may obtain Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt i

Legal Analysis

The Federal Circuit's analysis centered on the contract law remedy of "cover." Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ulla

Flash-to-Full Case Opinions

Flash Summary

  • Affirmed a $102M damage award for NASA’s breach of a satellite
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore

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