Question
Linen Supply, Inc. entered into a 36-month Rental Service Agreement (the Service Agreement) with Crisp & Clean Company (Customer) such as mop heads, towels, and
- Linen Supply, Inc. entered into a 36-month Rental Service Agreement (the "Service Agreement") with Crisp & Clean Company ("Customer") such as mop heads, towels, and other linens like napkins. In the Service Agreement, Linen Supply, Inc., agreed to provide Customer with shop towels, dust mops, and wet mops on a weekly basis at rental charges specified in the Service Agreement. Customer agreed to purchase all of its requirements for these items only from Linen Supply, Inc. The Service Agreement required Customer to accept and to pay each week a rental amount determined from a schedule based on supplies ordered, but with a minimum weekly rental of $800 for each month of the 36-month term. Paragraphs 11, 12, and 13 of the Service Agreement provided:
"11. In the event of the termination by Customer before expiration of the initial term, Linen Supply, Inc. will be damaged in an amount that is difficult to estimate or calculate accurately. Therefore, in the event of such early cancellation, Customer shall pay Linen Supply, Inc. 50% of the average of the weekly rental charges during the preceding 26 weeks (or such lesser number of weeks as have actually elapsed during the term, or, if service has not commenced, the anticipated initial weekly billing) times the number of weeks remaining in the balance of the term, plus all other due and unpaid charges. Customer hereby represents and admits that the amount to be paid under this paragraph 11 are a reasonable forecast of Linen Supply, Inc.'s actual losses resulting from Customer's early cancellation and are not a penalty. Customer consents to jurisdiction and venue in the County of Linen Supply, Inc.'s Office. Customer shall be liable to Linen Supply, Inc. for all attorneys' and expert witness' fees, expenses and costs incurred in any lawsuit arising out of this Agreement.
12. This Agreement shall be suspended in the event of interruption of service due to strikes, lockouts, and causes beyond Customer's or Linen Supply, Inc.'s control that affect Customer's or Linen Supply, Inc.'s business.
13. This Agreement contains the entire understanding of the parties. No representations, warranties, promises or inducements, oral or written, not specifically set forth in this Agreement shall be binding on any of the parties. This Agreement can be amended only in writing signed by both parties. This Agreement is binding upon any successors to the businesses of the respective parties, and the respective parties shall so inform any such successor. Linen Supply, Inc. may assign this Agreement without the consent of Customer. On such assignment being made, Linen Supply, Inc. is relieved from any liability which may arise. "
At the time Customer entered into the Service Agreement, it was also a party to a one-year janitorial contract with the Bridgeton Animal Hospital, which had four one-year renewal options. On December 31, 2020, 18 months into the Service Agreement, Customer's contract with the Bridgeton Animal Hospital expired, and the Bridgeton Animal Hospital did not renew it. Customer contacted Linen Supply, Inc. and told Linen Supply, Inc. it no longer needed Linen Supply, Inc.'s services because Customer was no longer cleaning the Bridgeton Animal Hospital. Linen Supply, Inc. stopped providing the service, and Customer stopped making payments.
Linen Supply, Inc. filed a lawsuit against Customer to recover for breach of contract. Customer argued that it had no liability under the agreement because its contract with the Bridgeton Animal Hospital had been terminated and as a result it no longer had a need for the supplies from Linen Supply, Inc. Customer attempted to present evidence of communications between Linen Supply, Inc. and Customer regarding the details of Customer's servicing of Bridgeton Animal Hospital. What result and why? Could the VA Hospital done anything to prevent this result?
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