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Keywords

contractbreach of contractdamages

contractplaintiffdefendantdamages

Related Cases

Keystone Diesel Engine Co. v. Irwin, 411 Pa. 222, 191 A.2d 376, 1 UCC Rep.Serv. 184

Facts

Keystone Diesel Engine Company sold a diesel engine to Floyd T. Irwin for approximately $3000, which was later installed in a tractor. The engine malfunctioned, prompting Keystone to perform repairs at its own expense. Irwin refused to pay for additional repairs, leading Keystone to file an action to recover $623.08. Irwin counterclaimed for $5150 in lost profits due to the engine's breakdowns, which rendered the tractor unusable for 27 days.

The plaintiff, Keystone Diesel Engine Company, Inc., (Keystone) is a dealer in diesel engines, and the defendant, Floyd T. Irwin, (Irwin) operates tractor-trailers as a contract carrier. Sometime prior to July 1960, Keystone sold Irwin a diesel engine for approximately $3000. which was subsequently installed in a tractor. The engine did not function properly and the plaintiff Keystone performed certain modifications and repairs to the engine at its own expense. Subsequent repairs were required and the plaintiff performed the additional work allegedly based upon an oral contract with the defendant whereby the defendant agreed to pay the plaintiff for the additional work.

Issue

Whether the counterclaim for loss of profits was properly stricken by the lower court.

Rule

A party may recover damages for breach of contract only if they were reasonably foreseeable and within the contemplation of the parties at the time the contract was made.

Where a contract is breached without legal justification, the injured party is entitled to recover (absent contrary provisions in the contract) whatever damages he suffered, provided 1) they were such as would naturally and ordinarily follow from the breach; 2) they were reasonably foreseeable and within the contemplation of the parties at the time they made the contract; 3) they can be proved with reasonable certainty.

Analysis

The court determined that the damages claimed by Irwin for loss of profits were not within the reasonable contemplation of the parties when they entered into the contract. The court emphasized that no facts were alleged that would have put Keystone on notice that it would be held responsible for Irwin's loss of profits due to the engine's malfunction. The court referenced previous rulings that established the need for parties to communicate any special circumstances that would affect potential damages.

The real issue to be determined is whether the damages sought for loss of profit were within the contemplation of the parties to the contract here in dispute.

Conclusion

The court affirmed the order striking off Irwin's counterclaim, concluding that the claim for loss of profits was too speculative and not within the contemplation of the parties.

The order of the court below is affirmed.

Who won?

Keystone Diesel Engine Company prevailed in the case because the court found that the counterclaim for loss of profits was not justifiable under the circumstances of the contract.

The lower court struck off the counterclaim on the basis that the claim for loss of profit was too speculative to permit recovery.

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