Friday, December 27, 2013

American Hospital Supply Corp. v. Hospital Products Ltd. case brief

American Hospital Supply Corp. v. Hospital Products Ltd. case brief summary
780 F.2d 589 (1986)

Defendant supplier appealed a decision of the United States District Court for the Northern District of Illinois, which granted a preliminary injunction against it in favor of plaintiff distributor in the distributor's action for breach of contract.

The distributor and supplier had a contract to provide exclusivity to the distributor to sell the supplier's goods. Due to the supplier's financial straits, the distributor purchased more goods than it needed. Although the contract provided for an automatic renewal unless the distributor stated otherwise, the supplier refused to comply with the contract. The district court granted a preliminary injunction to enforce the contract.


  • The court affirmed the grant of the injunction. 
  • The court held that the determination of whether to grant the injunction was based whether the harm to the distributor if the injunction were denied, multiplied by the probability that the denial would have been an error, exceeded the harm to the supplier if the injunction were granted, multiplied by the probability that the grant of the injunction would have been an error. 
  • That probability was one minus the probability of distributor's success at trial. 
  • Because a sufficient bond had been made to protect the supplier, because the distributor provided financial assistance, because the supplier clearly breached the contract, and because there was no frustration of public interest, the injunction was proper.
The court affirmed the grant of the preliminary injunction for the distributor against the supplier in a breach of contract action.

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