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

Hydraform Products Corp. (Hydraform) (plaintiff) manufactured steel woodstoves. In July 1978, Hydraform contracted to purchase a “trial order” of sufficient steel to make 40 stoves from American Steel & Aluminum Corp. (American) (defendant). American prepared a delivery receipt that limited American’s liability for any consequential damages suffered by Hydraform in connection with American’s steel. Hydraform’s agents signed the delivery receipt for each delivery from American. Hydraform later entered a contract to purchase steel from American for 400 stoves. American required Hydraform’s agents to sign the same delivery receipt limiting American’s liability for consequential damages. American eventually began making late deliveries of steel to Hydraform. Other deliveries from American were defective. As a result of American’s late and defective deliveries, Hydraform sold only 250 of its planned 400 stoves. In September 1979, Hydraform sold its woodstove-manufacturing division for $150,000 plus royalties, a price Hydraform’s president believed to be significantly below the actual value of the business. In December 1979, Hydraform brought suit in New Hampshire state court against American seeking consequential damages for lost profits due to American’s breach of contract. At trial, the jury was permitted to consider Hydraform’s damages based on its loss profits under its contract with American (150 stoves), its future lost profits for two years, and the lost profits caused by Hydraform’s selling of its woodstove business at a price below what its president believed the business to be worth. The trial court also held that American’s delivery receipt limiting liability did not prevent Hydraform from recovering consequential damages from American. The jury awarded Hydraform $80,245.12 in damages, and American appealed.