In the

United States Court of Appeals

For the Seventh Circuit

Nos. 00-1934 & 00-2055

Transportation & Transit

Associates, Inc.,

Plaintiff-Appellee, Cross-Appellant,

v.

Morrison Knudsen Corporation,

Defendant-Appellant, Cross-Appellee.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 98 C 2827--George W. Lindberg, Judge.

Argued November 7, 2000--Decided June 25, 2001

 Before Bauer, Coffey, and Easterbrook,

Circuit Judges.

 Easterbrook, Circuit Judge. Transportation

& Transit Associates (tta) worked as a

subcontractor for the railcar manufacture

and repair division of Morrison Knudsen

Corp. (mkc). A disagreement between the

firms was resolved in 1993 by a contract

promising tta at least $15 million in

business over the next five years, plus

status as "a most preferred vendor" for

other work. A downturn in its business

caused mkc financial distress: it lost

$350 million in 1994 and decided to spin

off its rail operations, the principal

cash drain. In 1995 mkc divested its

transit division to American Passenger

Rail Car Company, llc (Amerail), which was

formed and funded by firms that had

issued surety bonds for mkc’s transit

contracts. mkc delegated to Amerail the

obligation to tta--but tta was not asked

for, and did not consent to, a transfer

of mkc’s responsibilities under the

contract. Amerail hired tta for some work,

but not as much as the contract required.

Near the end of the five-year term tta

sued both mkc and Amerail under the

diversity jurisdiction. Amerail failed to

answer the complaint; a default judgment

was entered, and it has dropped out of

the case. On cross-motions for summary

judgment the district court ruled that mkc
is liable to tta for failing to meet the

award-value requirements of para.3 in the

contract, but is not liable for breach of

the most-preferred-vendor undertaking in

para.4. 1999 U.S. Dist. Lexis 2551 (N.D.

Ill. Feb. 23, 1999). The judgment of some

$863,000 in tta’s favor reflects the

parties’ agreement about damages (given

the court’s rulings on liability), to

which the judge added about $74,000 in

prejudgment interest. 2000 U.S. Dist.

Lexis 3070 (N.D. Ill. Mar. 7, 2000). Both

sides have appealed.

 The parties treat this as a dispute

about the meaning of para.3 and para.4 in

their contract, rather than about the

branch of contract law devoted to

delegation of duties. See E. Allan

Farnsworth, 3 Farnsworth on Contracts

sec. sec. 11.1, 11.10-11.11a (2d ed.

1998); Restatement (2d) of Contracts

sec. 318 (1979). The district court

applied the contract law of Illinois, and

as neither party protests on appeal we do

likewise. We analyze the contract in

light of the principle (present in

Illinois law) that "an effective

delegation does not relieve the

delegating party [mkc] of its duty; that

requires either consent by the obligee

[tta] or performance by the delegate

[Amerail]." Farnsworth at sec. 11.10 page

125. See also Restatement sec. 318(3); 810

ILCS 5/2-210(1) ("No delegation of

performance relieves the party delegating

of any duty to perform or any liability

for breach.").

 Here is what the parties agreed in 1993:

3. AGREEMENT FOR FUTURE WORK: mkc

agrees that, over the next five year

period it shall contract with tta a

work scope value of $15,000,000.00

largely to be performed by tta at

Hornell or other reasonable

location. The five year period shall

commence on the date of execution of

this Agreement. The scope of work

shall be compatible with the

business of tta at the time the

future contract arises. The contract

awards to tta shall be evenly

distributed as much as reasonably

possible on a value basis throughout

the five year agreement period. tta

agrees that its quality level and

schedule performance shall be

consistent with that of current
industry standards and mkc purchase

requirements.

In the event mkc loses some of its

current railcar projects and does

not have other offsetting projects

of the same approximate value, the

workscope value shall be reduced

proportionally.

In the event that mkc breaches this

agreement for future work, it is

agreed that because of the

difficulty of accurately estimating

the harm to tta, mkc shall pay to

tta, as reasonable compensation, a

fee of ten percent (10%) of the

unawarded contract sum.

4. TTA AS MOST PREFERRED VENDOR: mkc

agrees to treat tta as a most

preferred vendor for other work over

the next five (5) years.

mkc contends that plenty of words in this

agreement are ambiguous, requiring a

trial so that the parties can introduce

evidence about industry customs, course

of performance, and the negotiating

history. It points particularly to the

words "loses," "projects," "future work,"

and "future contract." But of these only

the word "loses" (in subparagraph 2 of

para.3) matters to liability; the others

concern the quantum of damages, which

have been stipulated. Unless the spinoff

of the transit division reduced mkc’s

obligation to zero, it cannot avoid some

liability. Only the proposition--mkc’s

principal argument on appeal--that by

delegating performance to Amerail mkc

"los[t all] of its current railcar

contracts", so that a "proportional"

reduction cuts the obligation to nothing,

requires attention. And that proposition

stretches language beyond the breaking

point. Illinois does not apply the

deconstructionist approach of Jacques

Derrida to the law of contracts. mkc did

not "lose" its book of railcar business;

it gave that business away in order to

stanch the flow of red ink. None of the

evidence mkc wants to present would

demonstrate that in the transportation

business "lose" means the same as "sell"

or "assign" or "delegate." The projects

remained; the firms that had hired mkc

still needed cars made or repaired; only

the identity of the firm doing that work

changed. What is more, para.3 refers to
the loss of "some of" the projects;

provision for selling the whole line of

business would have required different

language. Thus mkc’s argument implicitly

challenges the principle that delegation

of duties does not relieve the delegating

party of its responsibility to keep its

promises. Yet mkc does not take on that

principle directly; it is entrenched in

the law of contracts, and para.3 of this

contract does not suggest its

modification.

 mkc advances four affirmative defenses:

novation, waiver, estoppel, and laches.

Note that it does not assert the statute

of limitations: even if tta had cause for

insecurity, and therefore could have

brought suit as soon as mkc delegated

performance to Amerail in 1995, see

Central States Pension Fund v. Basic

American Industries, Inc., No. 00-3920

(7th Cir. June 5, 2001), it sued in time

under the ten-year period Illinois

provides for written contracts. 735 ILCS

5/13-206. The availability of laches is

legally doubtful. Does Illinois treat

laches as a defense to an action seeking

only damages? mkc does not point to such

a precedent. Anyway, the defenses of

estoppel and laches fail because mkc

cannot explain how it suffered prejudice

from tta’s decision to delay filing suit

until close to the end of the five-year

agreement, when the amount of shortfall

could be determined. What would mkc have

done differently to reduce the damages

had tta sued earlier? The contract does

not contain a notice-and-cure clause; and

mkc, having left the railcar business, was

in no position to cure even if tta had

started howling bloody murder in 1995.

Actually tta’s president did send a letter

near the time of the assignment reminding

mkc that tta would hold it to its

promises, but this was unnecessary;

promises are binding with or without

reminders. The letter helps squelch mkc’s

claim that tta waived its entitlement to

performance; a demand for performance is

the polar opposite of waiver. And the

plea of novation is hollow: mkc does not

point to any document evincing tta’s

consent to have Amerail substituted for

mkc under the contract. tta was, and is,

entitled to wait until the end of the

period to learn the extent to which

Amerail would perform and then hold mkc

responsible for its shortfall.
 The shoe is on the other foot in tta’s

cross-appeal, invoking para.4 of the

contract: "mkc agrees to treat tta as a

most preferred vendor for other work over

the next five (5) years." Now it is tta

that argues ambiguity and the need for a

trial. "Most preferred vendor" certainly

has a broad range of possible meanings.

The one tta prefers is that it was to

receive a "last look" at all bid

opportunities within the scope of its

operations. In other words, before mkc (or

Amerail) let a subcontract that tta could

perform, tta was to have the chance to

match the low bid; and if it did this tta

was to receive the contract. According to

tta, some $77 million of subcontracts that

mkc and Amerail awarded from 1993 through

1998 fit that description. On

tta’sunderstanding of what para.4 means,

mkc broke its promise; neither mkc nor

Amerail (after the delegation in 1995)

even once offered tta an opportunity to

meet another subcontractor’s bid. But

this does not matter unless tta can show

damages, and the district court held that

it could not do so.

 Challenged by mkc to show even one

subcontract (out of the whole $77

million) on which it could have made a

profit by matching the low bid, tta has

been reduced to silence. Although tta

wants to avoid that burden, the party

claiming injury from breach must

establish the amount of damages. The

demonstration need not be precise, see

Oakleaf of Illinois v. Oakleaf &

Associates, Inc., 173 Ill. App. 3d 637,

648-49, 527 N.E.2d 926, 933-34 (1st Dist.

1988), but the plaintiff must have a

sensible basis for its claim.

Subparagraph 3 of para.3 liquidates

damages at 10% of the shortfall; para.4

omits that crutch. tta’s submission that

it had a profit margin of 15% on its

subcontracts does not establish that it

would have had that, or any, margin if it

had to match the lowest bid on contracts

within the scope of para.4. There is no

point in litigating a case if the

plaintiff is unprepared to demonstrate

loss, so the district court was right to

grant summary judgment to mkc with respect

to para.4.

 Illinois provides for prejudgment

interest at 5% per year on "all moneys

after they become due on any . . .

instrument of writing". 815 ILCS 205/2.
This contract was an "instrument of

writing". mkc relies on a judicial gloss

limiting interest to situations in which

the amount due was liquidated or readily

ascertainable. See Alguire v. Walker, 154

Ill. App. 3d 438, 448, 506 N.E.2d 1334,

1341 (1st Dist. 1987). The liquidateddamages clause in para.3 subparagraph 3

satisfies this requirement. See

Residential Marketing Group, Inc. v.

Granite Investment Group, 933 F.2d 546,

549-50 (7th Cir. 1991) (Illinois law).

Although para.3 contains variables that

could have led to disputation--how much

work did Amerail "lose" by customers’

cancellation of orders, for example, and

how much in "offsetting projects" did

Amerail generate?--the parties were able

to work this out for themselves once the

district court concluded that mkc is

liable for Amerail’s shortfall in

performance. mkc contends that because its

liability was not foreordained it may not

be required to pay interest. This is not

so; it is uncertainty of amount owed,

rather than uncertainty about liability,

that would preclude an award of

prejudgment interest. See Ash v. GeorgiaPacific Corp., 957 F.2d 432, 439 (7th

Cir. 1992) (Illinois law); New Hampshire

Insurance Co. v. Hanover Insurance Co.,

296 Ill. App. 3d 701, 709, 696 N.E.2d 22,

28 (1st Dist. 1998). Anyway, if it

mattered, we would be inclined to say

that mkc’s liability was foreordained. Its

definition of "lose" was farfetched, its

four affirmative defenses feeble.

Affirmed