## Facts

- Bausch & Lomb Inc. (B&L) entered a 1984 exclusive worldwide distribution agreement with Sonomed Technology, Inc. for ophthalmic ultrasound devices.
- In exchange for exclusivity and minimum purchase commitments, B&L paid Sonomed $500,000 up front.
- In 1986, the parties rescinded the 1984 agreement and executed a new agreement extending exclusivity to a total of five years while narrowing territorial scope.
- Before 1987, Sonomed sold products within B&L’s exclusive territory, contrary to the agreement.
- In 1987, Sonomed informed B&L it would no longer fulfill product orders.
- After a bench trial, the district court found Sonomed liable for breach, rejected Sonomed’s counterclaims, denied Sonomed leave to amend to add a “goods sold and delivered” claim, and awarded B&L $555,000 plus interest (including the full $500,000 payment).
- B&L cross-appealed the denial of additional damages for lost inventory value.

## Issues

1. Whether the district court clearly erred in finding that Sonomed, not B&L, breached the 1986 agreement.
2. Whether B&L could recover the $500,000 lump-sum payment for exclusivity as damages, and whether recovery should be limited to the unearned portion.
3. Whether the district court correctly rejected B&L’s claimed damages for lost inventory value.
4. Whether the district court properly denied Sonomed’s counterclaims and denied leave to amend to add a claim for goods sold and delivered.

## Decision

- Affirmed the finding that Sonomed breached the purchase and distribution agreement.
- Affirmed the denial of Sonomed’s counterclaims.
- Affirmed the denial of Sonomed’s motion to amend to add a goods-sold-and-delivered claim.
- Affirmed the denial of B&L’s request for additional damages for lost inventory value.
- Vacated in part the damages award and remanded for recalculation of the $500,000 component, limiting recovery to a prorated amount corresponding to the unexpired portion of the exclusivity term at the time of breach.

## Legal Principles

- Appellate review of a bench-trial finding of breach applies the clearly erroneous standard to factual determinations.
- When a party pays a lump sum for time-based contractual rights (such as exclusivity) and receives partial performance before breach, recovery of that prepaid amount is limited to the value of the unexpired portion of the promised performance.
- Restitutionary recovery of prepaid consideration aims to prevent unjust enrichment without granting a windfall; a full refund is improper where the payer has already received part of the bargained-for benefit.
- Denial of leave to amend pleadings is reviewed for abuse of discretion; late amendments may be denied where untimely and disruptive.

## Conclusion

The Second Circuit upheld liability and most trial rulings but required a recalculation of damages because the $500,000 paid for exclusivity could not be recovered in full after B&L had already enjoyed exclusivity for part of the contract term; recovery was limited to a prorated amount for the remaining unperformed period.


Bausch & Lomb Inc. v. Bressler, 977 F.2d 720 (2d Cir. 1992)