LAKE RIVER CORP. V. CARBORUNDUM CO.
769 F.2D 1284 (7th Cir. 1985)
NATURE OF THE CASE: Carboraundum (D) appealed and Lake River (P) cross-appealed a
judgment in a case brought by P for liquidated damages, contending assertion of a lien on
bagged product that it refused to ship to D's customers.
FACTS: Carborundum (D) manufactured an abrasive powder used in making steel. Lake River
(P) was under contract to provide distribution and warehouse services to in Illinois. D
insisted that P install a new bagging system to handle the contract. P insisted upon an
agreement for a minimum amount of business over three years in order to recover the cost of
the new equipment. The total amount under the minimum would have equaled $533, 000 in
billings. When the contract had expired only 12,000 tons of the 22,500 tons were ever
bagged. P insisted that D owed it $241,000 under the contract. D refused, on the ground that
the formula imposed a penalty. P sued D and D counter sued for P's placing D's products
under a lien. P had in its warehouse 500 tons of bagged Ferro Carbo, having a market value
of $269,000, which it refused to release unless D paid the $241,000 due under the formula.
The trial court gave P $42,000 in net damages and both parties appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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