All-Tech Telecom v. Amway

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All-Tech Telecom v. Amway
Court 7th Circuit
Citation
Date decided April 7, 1999

Facts

In 1987, Amway created TeleCharge, a new long distance phone. TeleCharge was geared toward hotel & restaurant guests.

Customers would use a credit card or calling card to make long-distance call on a TeleCharge; the charges were divided between the (1) hotel or restaurant, (2) the phone distributor, & (3) the phone company.

Away hyped up TeleCharge as the best phone system in the country.

In 1988, All-Tech was created to distribute the TeleCharge phone. Amway told distributors that each TeleCharge phone could generate $750 in profits.

Over the next few years, there were numerous problems with TeleCharge phones such as regulatory hurdles.

By 1992, the TeleCharge phones had become obsolete.

Procedural History

All-Tech Telecom, Inc. ("All-Tech") sued Amway for breach of warranty, intentional & negligent mis-representation, and promissory estoppel.

Amway won summary judgment on the claims of misrepresentation & promissory estoppel.

The jury found a breach of warranty; however, All-Tech wasn't awarded any money damages.

Issues

Does the Economic Loss Doctrine (ELD) prevent a party from seeking duplicate remedies for contract claims?

Holding

Yes. The Economic-Loss Doctrine (ELD) prevents a party from seeking duplicate remedies for contract claims.

This case is a purely contract claim.

Reasons

Richard Posner: When there are contractual remedies, there is no need for courts to also allow parties to seek tort remedies, such as mis-representation.

Rule

A promise is about the future. A promissory estoppel applies to when a promise can't be enforced under contract law principles.

A warranty is about the past. This is protected by contract law.


One cannot use a tort remedy in a breach of contract claim.

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