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On July 12, 1956, the Government of Egypt nationalized the Suez Canal Company and took over operation of the canal. On October 2, the United States (D) hired Transatlantic (P), operator of a cargo ship, to carry a full cargo of wheat from a United States Gulf port to a safe port in Iran. The planned route included sailing through the Suez Canal. Two days after P set sail on October 27, Israel invaded Egypt. On October 31, Great Britain and France invaded the Suez Canal Zone, which resulted in the Egyptian Government's obstruction and closing of the Suez Canal. P's representative then contacted a Department of Agriculture employee with relatively no authority to arrange for additional compensation for the trip around the Cape of Good Hope. The employee advised P that, although P was probably not entitled to additional compensation, P was free to file such a claim. P went by the Cape of Good Hope and incurred an additional $43,972 in expenses. P sued in quantum meruit for the additional amount, claiming that performance was impossible because it could not travel the 'usual and customary' route that was allegedly implied in the contract. The district court dismissed the action in libel (an admiralty action). P appealed.

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