Milgard Tempering, Inc., Plaintiff-Appellee/Cross-Appellant, v. Selas Corporation of America, a foreign corporation, Defendant-Appellant/Cross-Appellee, 902 F.2d 703

Summary

Plaintiff buyer and defendant seller entered into a contract for the purchase of an industrial glass furnace. The parties modified the contract and agreed to forego any pre-acceptance tests. The contract limited defendant's liability for breach of warranty to repair or replacement of the furnace and it barred any liability for consequential damages. After the furnace was put into production, defendant was unable to get it to perform to the standards contained in the contract. Plaintiff sued for breach of contract and warranty. The trial court, on remand, found that the limited repair remedy failed of its essential purpose and that defendant's default was sufficiently severe to expunge the cap on consequential damages. The court affirmed, holding that the district court did not abuse its discretion and that the repair remedy had failed its essential purpose and caused plaintiff losses not part of the bargained-for allocation of risk.