Hawaiian Telephone Co. v. Microform Data Systems, Inc.

Microform Data Systems, Inc. (“MDS”) appeals the district court’s judgment in favor of Hawaiian Telephone Company (“HT”) in HT’s breach of contract action.

FACTS AND PROCEEDINGS

In 1978, MDS, a California corporation, contracted with HT, a Hawaii public utility, to manufacture and install a computerized directory system. The contract provided that MDS would complete installation of the host computer by February 16, 1979, and specified fifteen dates for MDS to install operator, supervisory, and training positions, beginning February 16 and ending April 20, 1979. Failure to meet these installation dates would trigger a penalty. This penalty, which the parties agreed would not exceed $100,000, was to accrue at the rate of $1,000 for each day installation was delayed, and was to be discounted from the system’s sales price. Additionally, if installation of the host computer by February 16, 1979 was “substantially delayed,” MDS agreed to provide HT with an interim backup system that would be fully operational by May 19, 1979. After installation, HT had five business days to reject the equipment if the system did not perform according to specifications. The specifications required…