In the case of Jacob Reed's Sons v. United States, 1926, the U.S Supreme Court ruled on a dispute involving government contracts for military uniforms. The Philadelphia-based clothing manufacturer Jacob Reed's Sons had entered into an agreement with the federal government to supply uniforms for West Point cadets but later refused to fulfill their contract when cotton prices increased significantly. They argued that they should be excused from performance due to "commercial impracticability," claiming that fulfilling the contract would result in substantial financial loss because of unforeseen changes in market conditions (the rise in cotton prices). However, the court rejected this argument and held that such business risks are inherent in fixed-price contracts and must be borne by contractors rather than passed onto taxpayers or consumers. Therefore, it was decided that Jacob Reed’s Sons were not exempted from their contractual obligations despite facing potential losses due to fluctuating raw material costs.

In the dissenting opinion for Jacob Reed's Sons v. United States, Justice Stone argued that the majority misinterpreted the intent of Congress in its application of a statute regarding government contracts. He contended that it was not within Congress' intention to allow contractors to recover costs incurred due to their own inefficiency or negligence, but rather only those unforeseen costs directly caused by changes ordered by the government. The majority’s interpretation would effectively shift all risks associated with contract performance onto taxpayers, which he believed contradicted legislative intent and public policy considerations. Furthermore, Justice Stone criticized the Court's reliance on an ambiguous clause in determining liability instead of considering other clear provisions and overall statutory context.