Contract-Price Compliance Ordered by Judge

A Michigan circuit court judge has ordered Lear Corp. to keep supplying automaker DaimlerChrysler with seats and interior trim at agreed-upon prices, even though Lear argued that higher oil prices have driven its costs for such raw materials as plastics sharply higher.

A Michigan circuit court judge has ordered Lear Corp. to keep supplying automaker DaimlerChrysler with seats and interior trim at agreed-upon prices, even though Lear argued that higher oil prices have driven its costs for such raw materials as plastics sharply higher.

A temporary restraining order was issued

late last week in a rare example of an automaker taking a supplier to court to force price-compliance with a contract. Chrysler tells the Associated Press it was the first time it has sued a supplier; Lear says it was the first time it has been sued by an automaker. Lear said the rising cost of oil increased its costs for resin used to make plastic parts. Lear had informed DaimlerChrysler it would absorb those increases for one month but would transfer the increases to DaimlerChrysler after that. Lear also said it would stop shipping parts to Chrysler, according to the lawsuit. DaimlerChrysler contends its contract with Lear through the 2006 model year prevents Lear from raising prices. Lear claims in court papers that it doesn't have to follow the contract because DaimlerChrysler unilaterally imposed price reductions on Lear in September. DaimlerChrysler denies that.

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