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Gruber v. S-M News Co.

United States District Court for the Southern District of New York
126 F. Supp. 442 (1954)


Gilbert Gruber and Anthony Martin (plaintiffs) entered an exclusive dealership contract with S-M News Company (News) (defendant). Under the contract, the plaintiffs would produce 90,000 sets of Christmas cards, and News would be reasonably diligent to market and sell all the cards. The contract also stated that News would pay the plaintiffs 84 cents for every set sold. News did not really try to sell the cards, though. The plaintiffs got stuck with the cards and sued News for breach of contract. The plaintiffs were able to sell 40,000 sets four years later with a 6-cent profit on each set. At trial, News attempted to prove that it had made a reasonably diligent effort to sell the cards. Three of News’s distributors testified that the cards were not worth the $2 sale price given what other cards were available. News also had an expert testify that no more than 5,000 to 10,000 sets could have sold at that price. The plaintiffs, however, had an expert testify that News could have sold 80 to 85 percent of the cards based on the expert’s experience with puzzles, maps, and cleaning supplies. The plaintiffs’ expert also testified that the expert personally could have sold 50 sets.

Rule of Law


Holding and Reasoning (Murphy, J.)

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