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Linc Equipment Services v. Signal Medical Services

United States Court of Appeals for the Seventh Circuit
319 F.3d 288 (2003)


Signal Medical Services, Inc. (Signal) (defendant) leased a magnetic resonance imager (MRI) from Linc Equipment Services, Inc. (Linc) (plaintiff) for $30,000 per month. Signal and Linc were both merchants in the business of renting medical equipment. The lease for the MRI excluded consequential damages in any action brought by Signal, but not in actions brought by Linc. The MRI’s magnet was damaged when the machine was returned to Linc. The MRI was out of service for 10 months while it was repaired. Linc later sold the repaired MRI for $475,000. Linc sued Signal and the firm that transported the MRI, seeking, among other things, $300,000 in lost rental income for the 10 months that Linc was unable to rent out the MRI. The district court found that Illinois law allowed consequential damages to be awarded only if the contracting parties “expressly contemplated” such damages and held that, because Signal and Linc did not discuss or consider such damages when entering into the lease, the consequential damages of lost rental income could not be awarded against Signal. Linc appealed.

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