In the 1918 case Skinner & Eddy Corporation v. United States, the Supreme Court ruled on a dispute involving shipbuilding contracts during World War I. The Skinner & Eddy Corporation had contracted with the U.S. government to build ships at a fixed price per vessel but later sought additional compensation due to increased labor and material costs caused by wartime inflation. The company argued that these unforeseen circumstances constituted an "impossibility of performance" which should allow them to renegotiate their contract under common law principles. However, the Supreme Court rejected this argument, ruling in favor of the U.S government. It held that since both parties were aware of potential war-related risks when they entered into their agreement, those risks were implicitly factored into their contract terms from its inception; therefore it was not impossible for Skinner & Eddy Corp to fulfill its contractual obligations as claimed. The court's decision established important legal precedents regarding risk allocation in contracts and affirmed that private companies cannot use external economic conditions as grounds for altering agreed-upon prices after signing binding agreements with federal agencies.

In the dissenting opinion for Skinner & Eddy Corporation v. United States, it was argued that the government's control over railroads during World War I constituted a taking of private property without just compensation, violating the Fifth Amendment. The dissenting justices believed that while war powers allowed for extraordinary measures, they did not permit violations of constitutional rights. They contended that Congress had exceeded its authority by allowing the President to take possession and assume control of transportation systems without providing fair compensation to their owners. Furthermore, they disagreed with majority’s interpretation of “just compensation,” arguing it should be based on profits lost due to governmental use rather than merely operational expenses incurred by companies under federal control.