Far East Aluminium Works Co. v. Viracon, Inc.

Far East Aluminium Works Company (Far East) (plaintiff) was building a luxury resort and wanted to use a special kind of window called lites, which changed color in the sun. Viracon, Inc. (defendant) was one of the only manufacturers that sold lites. Far East bought the resort’s lites from Viracon, signing a contract that shifted most of the risk of defective windows to Far East. Specifically, in the contract, Viracon: (1) disclaimed any implied warranties of merchantability or fitness, (2) disclaimed any liability for consequential or incidental damages, and (3) limited the buyer’s remedies for defective windows to either a refund or a replacement window. Far East accepted delivery of the windows and installed them. The windows worked well initially but then began to fail. Viracon provided replacement windows as promised. However, it cost Far East $8 million to remove the malfunctioning windows and to install the replacement ones. Far East sued Viracon in federal district court in Minnesota for breach of contract and breach of warranty, seeking to recover the $8 million of removal and installation expenses as damages. Viracon moved to dismiss the complaint, arguing that these expenses were consequential damages that were not available under the parties’ contract. The district court granted the motion. Far East appealed to the United States Court of Appeals for the Eighth Circuit.