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New Hampshire Supreme Court - 127 N.H. 187
Tags: Consequential Damages
tl;dr:
Lost profits from sale must be certain, not speculative, to serve as a basis for consequential damages.Video Summary
Case Summary
In the 1985 case Hydraform Products Corp. v. American Steel & Aluminum Corp., the New Hampshire Supreme Court dealt with a contract dispute between a woodstove maker and a steel supplier. This case was significant due to its focus on contract law and consequential damages.
Hydraform, the plaintiff, ordered steel from American Steel, the defendant, to build 400 woodstoves. Late and defective deliveries led to only 250 woodstoves being made, resulting in lost profits and Hydraform selling its business at a loss. Hydraform sued for breach of contract and damages, while American Steel countersued for unpaid bills.
The trial court found American Steel guilty of breaching the contract and awarded over $200,000 in damages to Hydraform. Additionally, they deemed a damages limitation clause in the contract unenforceable. American Steel appealed, arguing no breach of contract, and claimed that Hydraform should have found another steel supplier.
The Supreme Court of New Hampshire affirmed that Hydraform was only allowed to recover for the certain lost profits on 150 stoves, not for uncertain future lost profits.
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The case involves an appeal by American Steel & Aluminum Corporation against a judgment in favor of Hydraform Products Corporation for damages due to negligent misrepresentation and breach of contract. The court found that the trial court erred in several ways, including allowing the jury to calculate lost profits based on inaccurate information and awarding damages for the diminished value of Hydraform's business. The court upheld the decision to not enforce the limitation of damages clause but reversed the judgment due to other errors. The court clarified that a limitation of remedy that is otherwise reasonable under §§ 2-718 and 2-719 of the Code becomes a term of the contract in the absence of preclusion in the original offer or seasonable objection by the offeror. The court found that the clause in question was unenforceable under § 2-719(2) of the Code as it failed to provide an effective remedy for breach. The court allowed the jury to consider Hydraform's claims for lost profits and loss in the value of the stove manufacturing business as they were reasonably foreseeable and followed the breach in the natural course of events. The court disallowed claims for lost profits on sales beyond the 400 stoves and for profits projected for subsequent years due to the inability to calculate any such loss with reasonable certainty. The court did not allow the jury to consider any contract claim for consequential damages beyond the loss on the sale of 150 stoves, and the claim for loss in the value of the business was also not allowed. The court did not provide a ruling on American's argument for a directed verdict on the count for negligent misrepresentation.
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