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Contracts Keyed to Whaley
Lake River Corp. v. Carborundum Co.
Citation:
United States Court of Appeals, Seventh Circuit, 1985. 769 F.2d 1284.Facts
Lake River Corporation (Plaintiff) entered into a distribution agreement with Carborundum Company (Defendant) whereby plaintiff would bag Ferro Carbo, an abrasive powder used in making steel, in its warehouses and ship it to defendant’s customers. Plaintiff had to purchase special equipment to fulfill the agreement. Defendant did not meet the minimum shipping requirements under the parties contract because demand for steel fell, so according to the contract, if defendant did not meet this requirement, it was responsible for reimbursing plaintiff for the new equipment. Plaintiff billed defendant for the $241,000 difference and refused to release the Ferro Carbo in its warehouses to defendant’s customers until defendant paid. Defendant refused and spent $31,000 shipping in alternative product to fulfill its outstanding customer orders.
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