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UNEXCELLED CHEM. CORP. v. DRAKE MFG. CO.

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY


March 8, 1957

UNEXCELLED CHEMICAL CORPORATION, Plaintiff,
v.
DRAKE MANUFACTURING COMPANY, Defendant

The opinion of the court was delivered by: WORTENDYKE

In this diversity action plaintiff seeks damages for defendant's alleged breach of its agreement to deliver to the plaintiff certain prescribed minimum quantities of bomb parachute opening delay bodies *fn1" during the months of September, November and December, 1953. Defendant, admitting the charged breaches of its contract with the plaintiff, asserts that its failure to make delivery according to the contract schedule was caused by plaintiff's failure to perform its reciprocal agreement to furnish to the defendant clips *fn2" required to be attached to the bodies in the course of their processing by defendant. The answer, moreover, includes a counterclaim for damages for plaintiff's alleged failure to furnish required materials and to make payment as prescribed by the terms of the contract; also by reason of claimed unwarranted cancellation of the contract with consequent loss to the defendant.

Plaintiff charges that the bodies which defendant was called upon to process and deliver under purchase orders Nos. 11,603 and 11,604 were required by the plaintiff for its performance of its prime contracts with the Government, designated respectively as CML-37 and CML-50, to which the purchase orders expressly related, and that deliveries precisely according to schedule were necessary to enable plaintiff to fulfill its commitments under the prime contracts. *fn3" The damages which the plaintiff seeks are alleged to have resulted from the failure of the defendant to make deliveries in accordance with the schedule agreed upon.

 The bases upon which plaintiff rests its claims for damages are three: (1) unproductive overhead expense which it necessarily incurred in reliance upon the promised availability of the bodies for further processing resulting from interruption of production by defendant's failure to meet delivery schedules; (2) general administrative expense necessarily incurred for the same purpose and continuing despite such interruptions of production; and (3) necessarily incurred stand-by labor costs during periods of such interruptions.

 The asserted bases for defendant's counterclaim for damages are (1) alleged loss of profits by reason of plaintiff's premature cancellation of its contract (P.O. 11,604) with defendant, and (2) the amount of defendant's alleged consequent commitment to its subcontractor, D-E Industries, Inc., for latter's loss of profits and cost of tooling. By its invitation No. CML-11-021-53-5 issued August 4, 1952, the United States Department of the Army called for competitive bids for the furnishing of 2,088,170 bomb parachute opening delay units designated as E10R1 in accordance with drawing No. D-14-32-3, and set forth that delivery was desired in the following quantities in the following months, viz.: April 1953 104,409 May 1953 313,255 June 1953 417,634 July 1953 417,634 August 1953 417,634 September 1953 417,634

19570308

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