Bak-a-lum Corp. of America v. ALCOA Bldg. Prods., Inc.

ALCOA Bldg. Prods., Inc. (ALCOA) (defendant) is a manufacturer of aluminum siding products. Bak-a-lum Corp. of America (BAL) (plaintiff) became an exclusive distributor of ALCOA products through a verbal agreement with ALCOA in 1962 or 1963. ALCOA terminated the exclusive distributorship agreement with ALCOA in January 1970 by appointing four additional distributors in the same geographic area. At the time, BAL had recently entered a new lease for a significantly expanded warehouse facility for use in its distribution of ALCOA products. BAL brought suit for breach of contract in New Jersey state court against ALCOA. At trial, BAL introduced evidence that ALCOA’s termination of the exclusive distributorship agreement would cost BAL $10,000 per month in lost profits. The trial court held that there was a binding and enforceable agreement between ALCOA and BAL that was terminable only after a reasonable period of time and on reasonable notice. Additionally, the trial court found that ALCOA purposely kept its decision to break the exclusive distributorship agreement a secret from BAL because it did not want to discourage BAL from zealously selling ALCOA products. The trial court concluded that a reasonable period time had passed on the agreement, and concluded that a reasonable period of notice to BAL would be seven months. The trial court determined BAL’s monthly lost profits to be $5,000 and awarded BAL $35,000 in damages. Both parties appealed.