Autotrol Corp. v. Continental Water Systems Corp.

918 F.2d 689 (7th Cir. 1990)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P and D entered into a contract to create a system for water purification based on a patented new technology, known as 'electrodiarese.' D owned the exclusive right to exploit the patent. P was to manufacture the control for the system and D the rest, and both companies would sell the completed systems -- P the large systems, D the small ones. Product specifications had not been completed when the contract was signed. The contracts stated that should the parties be 'unable, in good faith, to agree upon the contents of the Products Specifications Schedule by June 30, 1986, either party may elect to terminate this Agreement.' On June 25, the parties agreed to extend this deadline to July 17. The deadline passed, but neither party exercised its right of termination. Almost a year later, with the product specifications still not having been agreed upon, D declared the contract terminated. D encouraged P to continue working right up to the notice of termination. P argued that this supports promissory estoppel as well as an inference that the parties had modified the contract to waive D's right to terminate after July 17 for failure to agree on product specifications. The jury awarded P $245,000 in out-of-pocket costs of performance and more than $700,000 in overhead expenses. D appealed.