Lake River Corp. v. Carborundum Co.: Difference between revisions

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{{Infobox Case Brief
{{Infobox Case Brief
|court=U.S. Court of Appeals, 7th Circuit
|citation=769 F.2d 1284 (7th Cir. 1985)
|citation=769 F.2d 1284 (7th Cir. 1985)
|date=1985
|subject=Contracts
|subject=Contracts
}}
}}
'''Facts''': Plaintiff agreed to build a new bagging system for Defendant under a contract with a liquidated damages clause. Defendant breached, and Plaintiff wanted damages according to the liquidated damages clause.
'''Facts''':  


'''Holding''': Held for Defendant.
Plaintiff agreed to build a new bagging system for Defendant under a contract with a liquidated damages clause. Defendant breached, and Plaintiff wanted damages according to the liquidated damages clause.


'''Reasons''': Although Plaintiff is entitled to damages, the liquidated damages clause is unreasonable in that it is disproportionate to the actual loss.


'''Rule''': Damages = contract price - amount saved by non-shipment.
'''Issue''':
 
Whether a modern court shouldrefuse to enforce a penalty clause where the <span class="SpellE">signator</span>is a substantial corporation, well able to avoid improvident commitments.
 
 
'''Holding''':
 
Held for Defendant.
 
 
'''Reasons''':
 
Although Plaintiff is entitled to damages, the liquidated damages clause is unreasonable in that it is disproportionate to the actual loss.
 
 
'''Rule''':
 
Damages = contract price - amount saved by non-shipment.

Revision as of 02:24, February 2, 2020

Lake River Corp. v. Carborundum Co.
Court U.S. Court of Appeals, 7th Circuit
Citation 769 F.2d 1284 (7th Cir. 1985)
Date decided 1985

Facts:

Plaintiff agreed to build a new bagging system for Defendant under a contract with a liquidated damages clause. Defendant breached, and Plaintiff wanted damages according to the liquidated damages clause.


Issue:

Whether a modern court shouldrefuse to enforce a penalty clause where the signatoris a substantial corporation, well able to avoid improvident commitments.


Holding:

Held for Defendant.


Reasons:

Although Plaintiff is entitled to damages, the liquidated damages clause is unreasonable in that it is disproportionate to the actual loss.


Rule:

Damages = contract price - amount saved by non-shipment.

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