Linc Equipment Services v. Signal Medical Services

Signal Medical Services, Inc. (Signal) (defendant) leased an MRI machine from Linc Equipment Services, Inc. (Linc) (plaintiff) for $30,000 monthly; both parties were merchants in the medical-equipment rental business. The lease excluded consequential damages for claims brought by Signal, but not for claims brought by Linc. The MRI's magnet was damaged when returned, taking the machine out of service for ten months during repair; Linc later sold the repaired MRI for $475,000. Linc sued Signal (and the transport firm) seeking, among other things, $300,000 in lost rental income for the ten months the MRI was out of service. The district court, applying Illinois law requiring damages be "expressly contemplated" by the parties, found the parties never discussed such damages when entering the lease and denied the lost-rental-income award; Linc appealed.