Bak-A-Lum Corp. Of America v. Alcoa Bldg. Products, Inc.

351 A.2d 349 (1976).

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Nature of the Case

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Facts

Around 1963 P and D entered into a verbal agreement whereby P would be exclusive distributor D's aluminum siding and certain related products in Northern New Jersey. P was to maintain an adequate organization and exert its best efforts to promote the sales of the D products. Evidence showed that P produced to the satisfaction of D, even meeting fixed quotas of sales set by D during the latter phase of the relationship. D terminated the 'exclusive' in January 1970 by appointing four distributors to share the North Jersey territory with P. P sued D. The trial court refused a preliminary injunction against the termination of the exclusive distributorship. The trial court found a binding agreement terminable only after a reasonable period of time and on reasonable notice. It found that a reasonable period of time had passed before termination but that a reasonable period of notice of termination would be seven months. It established plaintiff's damages at $5,000 per month and entered judgment in plaintiff's favor for $35,000 together with interest from September 1, 1970. P's major grievance is that when D had already decided upon the termination of the distributorship and was secreting that plan from P, P undertook a major expansion of its warehouse facilities at substantial added operating expense. P asserts that D knew of and encouraged this step, leading P to believe it was well warranted in view of the expected enlargement of the business of both of the contracting parties. P believed it was entitled to additional damages from D for the excess of its expense for the period of the lease over its operating expenses in its former headquarters -- a loss allegedly attributable directly to D's breach of contract. The court placed little if any weight on the circumstances of the new lease as an element going to the reasonableness of the period for notice of termination, although it stated that the lease was a 'factor' for consideration. It pointed out that the decision to undertake the lease was P's and that P was able to use the space to store merchandise other than that purchased from D as well as D's lines. P appealed the damages award and D cross-appealed the court's judgment.