Lake River Corp. v. Carborundum Co.

Carborundum Co. (defendant), a steel-industry powder manufacturer, contracted with Lake River Corp. (plaintiff) to bag and ship its product, and because Lake River had to buy new equipment to fulfill the deal, it insisted Carborundum guarantee a minimum shipment quantity over three years or pay the shortfall. When steel demand fell and Carborundum missed its guaranteed minimums, Lake River billed it $241,000 for the difference and refused to release Carborundum's own product from its warehouses to Carborundum's customers until paid; Carborundum refused to pay and instead spent $31,000 shipping substitute product to fill outstanding orders. Lake River sued to enforce the minimum-shipment clause as liquidated damages, and Carborundum counterclaimed for roughly $269,000 in conversion and replacement-cost damages over the withheld product; the trial judge sustained both claims, netting Lake River owing Carborundum about $42,000, and both sides cross-appealed.