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AMF, Inc. v. McDonald’s Corp.

United States Court of Appeals, Seventh Circuit
536 F.2d 1167 (1976)


AMF, Inc. (AMF) (plaintiff) manufactures computerized cash registers. McDonald’s Corp. (McDonald’s) (defendant) operates a national chain of restaurants. In April 1968, McDonald’s paid $20,385.28 to AMF for a prototype computerized cash register, which was installed in McDonald’s Elk Grove, Illinois restaurant. McDonald’s later ordered sixteen computerized cash registers from AMF for its company-owned restaurants and seven additional computerized cash registers from AMF for restaurants owned by its licensees. AMF’s prototype in McDonald’s Elk Grove restaurant began having many problems and was ultimately removed in April 1969. McDonald’s requested AMF develop a set of performance and reliability standards for the future computerized cash registers ordered by McDonald’s. On May 1, 1969, AMF provided unsatisfactory performance and reliability standards. AMF stated that it did not have a working machine and could not produce one within a reasonable time because its factory employees were too inexperienced. Additionally, AMF requested that McDonald’s initially reduce its order from 23 machines to five. McDonald’s did not accept these terms, and both McDonald’s and AMF agreed that McDonald’s would cancel its order for 23 computerized cash registers because AMF was unable to perform its obligations under the contract. On July 29, 1969, McDonald’s officially repudiated its contract with AMF. McDonald’s brought suit against AMF in federal district court seeking to recover its $20,385.28 purchase price for the AMF prototype. AMF also filed suit against McDonald’s in federal district court seeking damages for the alleged wrongful repudiation by McDonald’s of its contract to purchase 23 computerized cash registers from AMF. The two cases were tried together. The district court held that McDonald’s was not entitled to recover its $20,385.28 purchase price for the AMF prototype. The district court also held that McDonald’s did not wrongfully repudiate its contract with AMF, and denied AMF’s request for damages. AMF appealed. 

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