In the 1921 case of Sloan Shipyards Corporation et al. v. United States Shipping Board Emergency Fleet Corporation and The United States, the Supreme Court was asked to determine whether a contract between Sloan Shipyards and the U.S. Shipping Board Emergency Fleet Corporation could be enforced despite allegations that it had been procured through fraud or duress. The court ruled in favor of the government entities, holding that even if there were irregularities in how the contract was obtained, these did not invalidate its terms because they did not affect its substance or performance. Furthermore, any claims for damages due to alleged fraudulent inducement should have been pursued separately rather than as a defense against enforcement of contractual obligations.

In the dissenting opinion for Sloan Shipyards Corporation v. United States Shipping Board Emergency Fleet Corporation and The United States, Justice McReynolds argued that the majority's decision was a departure from established principles of contract law. He contended that the government had entered into a binding agreement with Sloan Shipyards to pay for any increased costs resulting from changes in labor conditions or material prices during World War I. According to him, this commitment should be honored regardless of whether it resulted in financial loss for the government. Furthermore, he disagreed with the majority's interpretation of "extraordinary" as used in relation to price increases within their contracts; instead asserting that such term should not be limited only to unforeseen circumstances but also include significant changes due to war conditions which were known at time of contracting but whose extent could not have been predicted accurately.