Jewell-Rung Agency, Inc. v. The Haddad Organization, Ltd.

Jewell-Rung Agency, Inc. (Jewell) (plaintiff) was a Canadian importer and wholesaler of men’s clothing. In 1990, Jewell ordered samples of Lakeland-brand outerwear from the brand’s American manufacturer, the Haddad Organization, Ltd. (Haddad) (defendant). Using the samples, Jewell received orders from its Canadian customers. Jewell submitted a purchase order to Haddad for Lakeland garments with a $250,000 retail value for the fall 1991 season. Haddad accepted Jewell’s purchase order with the understanding that Jewell would become the exclusive Canadian distributor of Lakeland outerwear. By February 1991, Jewell had secured orders for over 15 percent of the outerwear. However, Haddad granted exclusive manufacturing and distribution rights to a third party, Olympic, and failed to fill Jewell’s purchase order. Jewell learned about Haddad’s breach at a time when it was too late to obtain substitute men’s outerwear for the fall season. Jewell refused to purchase substitute Lakeland outerwear from Olympic because, according to Jewell, Olympic manufactured lower-quality items, Olympic was a competitor, and Jewell did not wish to introduce its customers to Olympic. Jewell sued Haddad for breach of contract, seeking consequential damages of over $350,000. Haddad moved for summary judgment on the issue of damages. Haddad conceded for purposes of the motion that it had breached its contract with Jewell but argued that Jewell could not recover consequential damages because Jewell could have purchased substitute goods from Olympic. Haddad also argued that Jewell’s lost profits were limited to orders that had already been placed by Jewell’s customers.