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Remedies Keyed to Tabb, 8th
Lake River Corp. v. Carborundum Co.
Citation:
769 F.2d 1284 (1985)Facts
Lake River Corporation and Carborundum Company entered into a distribution contract in 1979 whereby Lake River would receive Ferro Carbo in bulk, bag it using a new specialized bagging system costing $89,000, and ship it to Carborundum’s midwestern customers. The contract included a minimum-guarantee clause requiring Carborundum to ship 22,500 tons over three years or pay the difference at prevailing rates. When the domestic steel industry declined, Carborundum shipped only 12,000 tons by the contract’s end in 1982. Lake River demanded $241,000 under the formula and impounded 500 tons of bagged Ferro Carbo worth $269,000. Carborundum refused payment, claiming the clause was a penalty, and incurred $31,000 in additional costs trucking replacement product from the East.
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