Corenswet, Inc. v. Amana Refrigeration, Inc.
United States Court of Appeals, Fifth Circuit
594 F.2d 129 (1979)
Corenswet, Inc. (Corenswet) (plaintiff) is an intermediate distributor of products manufactured by Amana Refrigeration, Inc. (Amana) (defendant). The business relationship of Corenswet and Amana was governed by a distributorship agreement permitting either party to terminate the agreement “at any time for any reason” after providing ten days’ notice. Between 1969 and 1976, the business relationship between Corenswet and Amana was successful and profitable. In 1976, however, Amana began negotiations with another distributorship. Amana did not inform Corenswet of these other negotiations. Amana did, however, inform Corenswet that it was terminating the distributorship agreement. Amana provided no reason for the termination, but relied on the termination provision expressly stated in the contract. In October 1976, Corenswet brought suit in federal district court against Amana seeking damages for breach of contract. Corenswet argued that Amana’s termination of the distributorship agreement was wrongful because it was arbitrary. The district court held that Amana’s termination was arbitrary and issued a preliminary injunction prohibiting the termination from going forward. Amana appealed.
Rule of Law
Holding and Reasoning (Wisdom, J.)