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Keywords

contractbreach of contractdamagesappealtrialcompliance
contractplaintiffdefendantdamagesappealanticipatory breach

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Scullin Steel Co. v. Paccar, Inc., 708 S.W.2d 756, 1 UCC Rep.Serv.2d 1172

Facts

Scullin Steel Company entered into a contract with PACCAR, Inc. for the sale of 2,700 car sets from January 1, 1979, to December 31, 1981. Despite initial compliance, PACCAR ceased orders in early 1981 due to a collapse in the rail car industry, leading Scullin to claim lost profits and overhead as damages. The trial court found that PACCAR's actions constituted a breach of contract, and Scullin sought damages for the remaining car sets that were not purchased.

The contract was for the sale of steel castings known as side frames and bolsters. Four side frames and two bolsters constitute one basic 'car set' which is the recognized unit for the sale of such castings.

Issue

Did the trial court err in its calculation of damages awarded to Scullin Steel Company for PACCAR's breach of contract, and was the award of prejudgment interest appropriate?

PACCAR attempted to negotiate some of the terms of the contract. It successfully reduced the number of car sets proposed by Scullin from 3,600 at 100 per month to 2,700 at 75 per month.

Rule

Under Missouri law, a seller is entitled to damages for breach of contract that may include lost profits and reasonable overhead, as well as prejudgment interest on those damages if they are ascertainable.

Scullin's damages for repudiation were the unpaid contract price together with any incidental damages but less expenses saved in consequence of the buyer's breach.

Analysis

The court analyzed the trial court's methodology for calculating damages, noting that while the approach appeared compliant with statutory measures, the application was flawed. The court found that the trial court failed to account for increased production costs and improperly included variable costs in the overhead calculation. Despite these errors, the court acknowledged that Scullin was entitled to some damages due to PACCAR's breach.

The court concluded that Scullin established with certainty that some damage resulted from the anticipatory breach of the entire contract when repudiated by PACCAR.

Conclusion

The Court of Appeals reversed the trial court's judgment regarding the calculation of damages and remanded the case for a new calculation, while affirming that Scullin was entitled to damages due to PACCAR's breach.

Order accordingly.

Who won?

Scullin Steel Company prevailed in the case as the court recognized its entitlement to damages due to PACCAR's breach of contract.

Defendant-buyer, PACCAR, Inc. (PACCAR), appeals judgment for plaintiff-seller, Scullin Steel Company (Scullin), in action for breach of written contract.

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