Southern International Sales Co. v. Potter & Brumfeld Div.

Southern International Sales Company, Inc. (Southern) (plaintiff), a Puerto Rican company, entered into a contract on April 2, 1969, in Puerto Rico with Potter & Brumfeld Division of AMF Inc. (Potter), a manufacturer of electrical products based in Indiana (defendant), under which Southern would serve as Potter’s exclusive sales representative for Puerto Rico and nearby American islands. Under the contract, either party could terminate the contract with 30 days’ notice, with or without cause. The contract’s terms contained a choice-of-law clause that required it to be interpreted under Indiana law. On December 21, 1971, Potter gave Southern notice of cancellation of the contract. Southern objected, asserting it had performed admirably under the contract and that Potter’s purpose was to usurp the business contacts developed by Southern. Southern filed suit in federal court in New York, arguing that Potter’s conduct violated the Puerto Rican Dealers’ Contracts Act. The act protected against outside companies taking advantage of Puerto Rican dealers by eliminating them or reducing their involvement after the dealers had developed positive market conditions for the outside companies’ goods or services. Under the act, a party had to have just cause to terminate a dealer’s contract. Southern and Potter filed cross-motions for summary judgment on stipulated facts focused on whether Indiana or Puerto Rican law applied.