Sanchelima International, Inc. v. Walker Stainless Equipment Co.

920 F.3d 1141 (2019)

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Sanchelima International, Inc. v. Walker Stainless Equipment Co.

United States Court of Appeals for the Seventh Circuit
920 F.3d 1141 (2019)

DD

Facts

Under the contract between Walker Stainless Equipment Co., LLC (Walker) (defendant) and Sanchelima International, Inc. (Sanchelima) (plaintiff), Sanchelima was Walker’s exclusive distributor of silos in Mexico, which meant that Walker was barred from directly selling silos there. Further, in the event of a breach by Walker, the contract contained a limited-remedies provision that capped the amount of damages available to Sanchelima but specifically disclaimed any damages arising indirectly from the breach, including for lost profits. These indirect damages were known as consequential damages. After Walker made numerous direct sales in Mexico, Sanchelima brought suit for breach of the exclusivity requirement. The district court determined that because the amount of damages under the limited-remedies provision failed to provide Sanchelima relief for Walker’s breach of exclusivity, the provision’s consequential-damages disclaimer was unconscionable. Hence, in the interest of fairness, the district court awarded Sanchelima consequential damages for the profits Sanchelima lost from Walker’s direct sales in Mexico. Walker appealed.

Rule of Law

Issue

Holding and Reasoning (Brennan, J.)

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