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Clinton Imperial China, Inc. v. Lippert Marketing

October 5, 2007

CLINTON IMPERIAL CHINA, INC., D/B/A HARRIS POTTERIES, PLAINTIFF-APPELLANT,
v.
LIPPERT MARKETING, LTD. AND JEFFREY LIPPERT, DEFENDANTS-APPELLEES
(LIPPERT MARKETING, LTD., COUNTERCLAIMANT AND CROSS-APPELLANT;
CLINTON IMPERIAL CHINA, INC., D/B/A HARRIS POTTERIES, AND ROBERT HARRIS, COUNTERDEFENDANTS AND CROSS-APPELLEES).



Appeal from the Circuit Court of Cook County Honorable Robert E. Gordon, Judge Presiding.

The opinion of the court was delivered by: Justice McNULTY

A sales agent helped a manufacturer find a retail distributor for its products. The manufacturer agreed to pay the agent a commission on its sales to the distributor for a period of five years. As the distributor preferred to communicate directly with the manufacturer, the agent did not provide the customary services of a sales representative. After paying commissions for more than a year, the manufacturer sued the agent to recover commissions paid after the agent stopped providing services. The agent countersued for commissions on all products the distributor agreed to purchase, even those ordered after the end of the agreed five-year period. The trial court found that the failure to provide customary services did not warrant forfeiture of commissions. The court awarded the agent commissions promised on all products the distributor ordered from the manufacturer during the agreed five-year period. We affirm the judgment entered against the manufacturer for those commissions.

BACKGROUND

In January 1995, Robert Harris, president of Harris Potteries (Potteries), met Jeffrey Lippert, president of Lippert Marketing (Marketing), at a trade show. Lippert told Harris he knew of a major distributor who might want to purchase unglazed stoneware products from Potteries. A few months later Harris and Lippert signed an agreement for Marketing to act as sales representative for Potteries. The agreement provided that "The Pampered Chef shall be exclusively assigned to [Marketing] and may not be reassigned to another sales representative or become a house account without the express consent of Lippert." A letter dated July 14, 1995, established Marketing's commissions at 10% of Potteries' sales to The Pampered Chef (Chef).

Chef instituted a policy of direct communication with manufacturers. Potteries designated Lippert as the person to service Chef's account. Chef's president called Harris and told him that Chef preferred to communicate directly with manufacturers. Harris called Lippert and told him Potteries would accommodate Chef, so Harris would assume responsibility for contact with Chef.

Partly because of Marketing's reduced role, Potteries renegotiated its contract with Marketing. In August 1995 Potteries and Marketing signed a document entitled "SALES REPRESENTATION AGREEMENT." The agreement provided:

"2. [Potteries] agrees to engage and [Marketing] agrees to supply all or some of the consulting marketing and sales services of [Marketing] as an independent agent as such services, generally available to the public, may pertain to ceramic product for sale by [Potteries] to The Pampered Chef Ltd. account.

3. [Potteries] acknowledges that [Marketing] has been the procuring agent of The Pampered Chef, Ltd., account *** and agrees to make [Marketing] the exclusive agent of said account during the term of this agreement. A copy of the July 5, 1995 AGREEMENT BETWEEN HARRIS POTTERIES AND THE PAMPERED CHEF, LTD., of which [Marketing] initiated and consulted on [Potteries'] behalf, is attached hereto and incorporated by reference herein. ***

***

5. For and in consideration of [Marketing's] procuring The Pampered Chef, Ltd. account for [Potteries] and rendering consulting marketing and sales expertise to [Potteries, Potteries] will pay compensation to [Marketing] as a percent of [Potteries'] annual collected sales (including sales up to December 31, 2000 but collected afterwards) to The Pampered Chef, Ltd. as follows[:]

from January 1, 1996, to December 31, 2000,  $0 to $20,000,000 of sales5% 20,000,001 to 30,000,000 of sales2% over 30,000,0001%

6. [Marketing] will be paid on paid invoices of all orders placed by The Pampered Chef, Ltd. [Potteries] will pay said commissions to [Marketing] by the end of the month following the month during which payment is received by [Potteries]. ***

11. This agreement shall terminate on December 31, 2000. [Potteries] may sell to The Pampered Chef, Ltd. after the expiration of this agreement on December 31, 2000 without any further compensation being paid to [Marketing]."

The July 5 agreement between Potteries and Chef, referenced in Potteries' agreement with Marketing, provided:

"[Chef] agrees to buy from [Potteries], and [Potteries] agrees to make and sell to [Chef], a minimum of 700,000 pieces in total during each of the calendar years 1996 through 2000."

In December 1995 Chef sent Potteries a proposed amendment to the July 5 agreement. According to the proposal, Chef would purchase a minimum of 3.5 million pieces each year from 1997 through 2000. In January 1996 Potteries and Marketing amended their August 1995 agreement by adding a limitation on Marketing's right to represent competitors of Potteries. But the amendment allowed specific relief:

"If, however, [Potteries] is unable to manufactur[e] sufficient quantities to meet at least 70% of the requirements of The Pampered Chef, Ltd., as detailed in the Agreement Between Harris Potteries and The Pampered Chef, Ltd. dated 7/5/95 and any addendums *** which has to date been amended stating the minimum required quantity is 3,500,000 pieces per calendar year beginning with 1997, then *** [Marketing] will be permitted to seek or solicit, or cause others to seek or solicit other vendors or manufacturers to supply unglazed stoneware to The Pampered Chef, Ltd."

In March 1996 Harris signed an amendment to Potteries' agreements with Chef, but this amendment called for a minimum of only 2 million pieces of unglazed stoneware per year, rather than the 3.5 million pieces Chef initially proposed. In 1997 Chef and Potteries signed a further amendment in which Chef and Potteries agreed that, because of decreased demand for Potteries' products, Chef would decrease its annual purchases, but it would extend the term of the agreement to reach the same sales total of 8 million pieces. Chef promised to purchase about 1 million pieces per year, but it would continue purchasing from Potteries at that rate at least through 2004.

Potteries paid commissions to Marketing on its sales to Chef each month. Despite the reduction in amounts sold, Marketing never exercised its right to contact manufacturers of ...


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