Am. Hosp. Supply Corp. v. Hosp. Prods., Ltd. - 780 F.2d 589 (7th Cir. 1986)

Rule:

Whether a plaintiff will be irreparably harmed if a preliminary injunction is denied (sometimes also whether plaintiff has an adequate remedy at law), whether the harm to plaintiff if a preliminary injunction is denied will exceed the harm to defendant if it is granted, whether plaintiff is reasonably likely to prevail at trial, and whether the public interest will be affected by granting or denying the injunction (that is, whether third parties will be harmed. The district court undertakes these inquiries to help it figure out whether granting a preliminary injunction would be the error-minimizing course of action, which depends on the probability that plaintiff is in the right and on the costs to plaintiff, defendant, or others of granting or denying a preliminary injunction.

Facts:

The distributor and supplier had a contract to provide exclusivity to the distributor to sell the supplier's goods. Due to the supplier's financial straits, the distributor purchased more goods than it needed. Although the contract provided for an automatic renewal unless the distributor stated otherwise, the supplier refused to comply with the contract. The district court granted a preliminary injunction to enforce the contract. 

Issue:

Was the grant of the preliminary injunction for the distributor against the supplier in a breach of contract action proper?

Answer:

Yes

Conclusion:

The Court held that the determination of whether to grant the injunction was based whether the harm to the distributor if the injunction were denied, multiplied by the probability that the denial would have been an error, exceeded the harm to the supplier if the injunction were granted, multiplied by the probability that the grant of the injunction would have been an error. That probability was one minus the probability of distributor's success at trial. Because a sufficient bond had been made to protect the supplier, because the distributor provided financial assistance, because the supplier clearly breached the contract, and because there was no frustration of public interest, the injunction was proper.