Next Generation Bar Exam Quiz
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CONTRACTS
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Caldwell Manufacturing ordered a custom die-casting machine from Renner Industries. Before signing, Caldwell told Renner that the machine was required for a production run under a supply agreement with Vance Electronics; if the machine was not operational by February 1, Caldwell would lose the Vance agreement. Renner delivered the machine on February 10. Caldwell lost the Vance supply agreement, under which it would have earned profits of $120,000. Renner did not know the amount of Caldwell's profit margin on the Vance work, but the parties agree that the claimed lost profits are reasonably certain.
The jurisdiction's rule is:
"To recover consequential damages, a plaintiff must show that the defendant had reason to know at the time of contracting that a loss of the kind the plaintiff sustained was a probable result of breach. If the defendant has reason to know the general nature of the loss but not its probable magnitude, that does not defeat recovery. The defendant need not know the precise amount or manner of loss in order for the loss to be foreseeable."
Is Renner liable for Caldwell's $120,000 in lost profits?
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