Hydraform Products Corp. v. American Steel & Aluminum Corp.

498 A.2d 339 (1985)

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Nature of the Case

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Facts

Hydraform (P) manufactured and sold woodstoves. P entered into a contract with American (D) for enough steel to manufacture 40 stoves. Upon delivery of those products, P signed a delivery receipt from D that warranted the product for 10 days after delivery, but notice must be given within 10 days in writing. That statement also disclaimed all consequential damages. A purchase order was given to D for the delivery of materials for 400 total stoves in four equal installments. Deliveries were late, and replacements of defective parts were late as well. P protested the late shipments and D kept assuring P that the problems would be solved. Late in the fall, P decided that D would never perform as agreed and attempted to enter into agreements with other suppliers but none could perform on his time frame. Late deliveries continued, and instead of selling 640 stoves it sold only 250 stoves. In September 1979 P sold its business for $150,000 plus royalties. P then sued D for breach of contract. P claimed $100,000 as damages for lost profits generally and $220,000 as a loss on the sale of the business. D moved to dismiss the claims for consequential damages based on the limitation of damages clause, and that P had failed to mitigate. That motion was denied under UCC 2-207 as a limitation of damages clause was a material alteration or was unconscionable and that the failure to cover would not bar damages. P got the verdict for $80,245.12, and D appealed.