Delta Dynamics, Inc. v. Arioto

69 Cal.2d 525 (1968)

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Nature of the Case

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Facts

P developed a trigger lock for use as a safety device on firearms. P entered into a contract with D as partners doing business as the Pixey Distributing Co., for the distribution and sale of the locks throughout the United States. The contract was to run for five years with options to renew. P agreed to manufacture or arrange for the manufacture of the locks and to supply them to Pixey, the exclusive distributor. Pixey agreed to sell not less than 50,000 units within one year from the date of delivery and not less than 100,000 units in each of the succeeding four years. If Pixey failed to distribute the minimum number in any single year, the agreement was subject to termination by P on 30 days' notice. Pixey never got close to the first-year quota. It purchased and paid for 10,000 locks. On October 1, 1962, P terminated the agreement. Thereafter it brought this action to recover damages for Pixey's failure to purchase the first year's quota. P got the judgment because the court rejected Pixey's defense that P's exclusive remedy for Pixey's failure to meet the quota was the right to terminate the contract. D appealed.