June 22, 2021

Diplomu Site

When Good Is Not Good Enough

Procedural Posture

In respondent licensor’s action against appellant licensee for damages for breach of contract, the Superior Court of Los Angeles County (California) rendered judgment in favor of the licensor and awarded monetary damages to the licensor. The licensee appealed.

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Overview

Under the license agreement, the licensee could manufacture and sell trailers that the licensor had designed and invented for six months; thereafter, if the license was not renewed, the licensee agreed to cease producing the trailer. An earlier agreement contained no requirement for the licensee to cease production after six months in the event they failed to effect a new agreement. The license was not renewed, but the licensee continued to manufacture and sell trailers. The appellate court found that a sufficient consideration was found in the surrender of the former rights existing under the original agreement. The argument that the license was void as a restraint on trade failed because the licensee was not prohibited from carrying on his lawful business of manufacturing trailers, but was barred merely from manufacturing and selling the licensed trailers. The licensor (promisee) was required only to show the amount of damages with reasonable certainty, and any uncertainties was resolved against the licensee (the promisor), because the licensee by his wilful breach of contract had given rise to the difficulty of proving the amount of lost profits.

Outcome

The judgement was affirmed.