## Facts

- Standard Fashion Co., a New York manufacturer of garment patterns, entered a written “agency” agreement with Magrane-Houston Co., a Boston dry-goods retailer, effective for two years and automatically renewable absent timely notice; termination required three months’ notice given within a specified post-term window.
- Standard agreed to sell patterns to Magrane-Houston at a discount, provide advertising materials, allow semiannual exchanges of obsolete stock for credit, and repurchase remaining stock at termination under stated conditions.
- Magrane-Houston agreed to maintain a minimum inventory level, pay on credit terms, and not assign or relocate the “agency” without consent.
- The contract also required Magrane-Houston not to sell any competing patterns on its premises during the contract term and to sell Standard’s patterns only at labeled prices.
- Magrane-Houston began selling a competitor’s patterns; Standard sued in equity to enjoin breach and to recover damages.
- The district court dismissed the bill as unlawful under Clayton Act § 3; the court of appeals affirmed; the Supreme Court granted review.

## Issues

1. Whether the controversy was moot because the contract had expired or was no longer in force.
2. Whether Standard had capacity to sue after ceasing business and winding up its affairs under applicable corporate-survival law.
3. Whether the “agency” arrangement was, in substance, a contract for sale of goods within Clayton Act § 3.
4. Whether the exclusive-dealing condition probably would substantially lessen competition or tend to create a monopoly, making the contract unenforceable under Clayton Act § 3.

## Decision

- The Supreme Court affirmed dismissal of Standard’s suit.
- The case was not moot: under the renewal/notice provisions, the contract continued beyond the initial term, and in any event a request for ascertainable damages prevented mootness upon expiration.
- Standard had capacity to sue because corporate-survival law continued the corporation’s existence for a limited period to prosecute and defend suits after winding up.
- The agreement was treated as a contract of sale under Clayton Act § 3 despite being labeled an “agency,” because the retailer purchased and stocked the goods subject to exchange/repurchase arrangements.
- The exclusivity clause barring sales of competitors’ patterns on the retailer’s premises had a probable effect of substantially lessening competition in the relevant line of commerce and therefore violated Clayton Act § 3.

## Legal Principles

- A request for injunctive relief does not become moot upon contract expiration where the pleadings also seek damages capable of ascertainment.
- A dissolved or wound-up corporation may retain capacity to sue or be sued for a statutorily defined period to conclude litigation.
- Courts apply Clayton Act § 3 based on economic substance rather than contract labels; an “agency” may be a sale if the retailer buys and resells the goods under inventory obligations.
- Clayton Act § 3 targets exclusive-dealing conditions attached to sales when, in the circumstances, the agreement probably will substantially lessen competition or create an actual tendency toward monopoly, not merely a theoretical possibility.
- An agreement conditioning purchase on a retailer’s promise not to deal in competitors’ goods can be an unlawful restraint when its probable competitive effect is substantial.

## Conclusion

The Court held that the pattern “agency” contract functioned as a sales arrangement conditioned on exclusive dealing, and because its likely effect was to substantially lessen competition, it violated Clayton Act § 3 and was unenforceable, requiring dismissal of the manufacturer’s claims for injunctive relief and damages.


Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346 (1922)