769 F.2d 1284 (1985)
In 1979 Lake River Corporation entered into a contract with Carborundum Company to provide bagging and distribution services for Ferro Carbo, an abrasive powder manufactured by Carborundum for use in steel production.1 Carborundum shipped the product in bulk to Lake River's Illinois warehouse, where Lake River bagged it and forwarded the finished product to Carborundum's midwestern customers; title remained with Carborundum until delivery.2 At Carborundum's insistence Lake River installed a new bagging system costing $89,000, and the parties included a minimum-quantity guarantee of 22,500 tons over the three-year term.3 If Carborundum failed to meet the guarantee, Lake River could invoice for the shortfall at then-prevailing rates; full performance would have generated roughly $533,000 in revenue for Lake River.4
Demand for domestic steel collapsed after the contract was signed, and Carborundum shipped only 12,000 of the guaranteed 22,500 tons before the agreement expired at the end of 1982.5 Lake River bagged the quantity actually received and was paid for that work, yet the guarantee formula left Carborundum owing an additional $241,000.6 When Lake River demanded payment Carborundum refused, asserting that the formula was unenforceable.7
At the time of the demand Lake River held 500 tons of bagged Ferro Carbo valued at $269,000 and refused to release it.8 Lake River offered to sell the product and place the proceeds in escrow pending resolution of the dispute, but Carborundum rejected the proposal, obtained substitute bagged product from the East at an added cost of $31,000, and continued serving its Illinois customers.9 Lake River then filed suit seeking the $241,000 as liquidated damages; Carborundum counterclaimed for the value of the withheld product and its extra transportation costs on a conversion theory.10
After a bench trial the district court entered judgment for both parties. Offsetting the awards and adding prejudgment interest left Carborundum approximately $42,000 ahead.11 Both sides appealed to the Seventh Circuit.12
Whether Lake River had a valid lien on the bagged Ferro Carbo that it refused to release?13
Under Illinois law an artisan's or bailee's lien arises only when the bailee has performed work on chattels and the charges for those materials, labor, and services remain unpaid; the lien's purpose is to prevent unjust enrichment of the owner, not to coerce payment of damages for an unexecuted portion of the contract.14
No. Lake River performed bagging and storage only on the 12,000 tons actually shipped and received full payment for those services before asserting any lien.15 The 500 tons of bagged product that Lake River withheld had already been paid for, and the asserted lien was intended solely to secure payment for the unperformed bagging of the remaining 10,500 tons.16 Because the charges for all work actually done had been satisfied, no lien attached under the governing Illinois authorities.
The facts confirm that Lake River was not in the vulnerable position of a contractor who has completed performance without payment.17 Instead, Lake River sought to use self-help to collect damages for a wholly executory portion of the contract.18 Recognition of a lien on these facts would impede marketability of goods without serving the policy of protecting parties who have conferred value without compensation.19
Lake River possessed no valid lien on the bagged Ferro Carbo.20
Whether the minimum-quantity guarantee clause imposes a penalty for breach of contract or is merely an effort to liquidate damages under Illinois law?21
A contractual damages provision is enforceable as liquidated damages only if it constitutes a reasonable estimate, made at the time of contracting, of the probable loss from breach and only if actual damages would have been difficult to ascertain after breach; if the stipulated sum greatly exceeds any reasonable upper estimate of likely damages or is invariant to the gravity of the breach, the provision is an unenforceable penalty.22
No. The minimum-guarantee formula—full contract price minus amounts already invoiced—always yielded Lake River more than its actual lost profits regardless of when breach occurred.23 At the outset, Lake River would have recovered a $444,000 net gain against an expected profit of only $107,000.24 After 55 percent performance the formula produced a $260,000 total gain, nearly two-and-a-half times the expected profit.25 Even at 90 percent performance the clause still awarded 30 percent more than the anticipated profit.26 These results follow because the formula ignores the substantial variable costs Lake River saved by not having to bag the unshipped tonnage.27
The clause therefore fails both prongs of the Illinois test. Damages were not difficult to estimate after breach, and the stipulated amount bore no reasonable relation to probable loss at any point in the contract term.28 The provision is accordingly a penalty and unenforceable.29
The minimum-quantity guarantee clause is an unenforceable penalty under Illinois law.30