Question

Certina USA is a watch manufacturer that sells its watches through traveling salespeople paid by it. Migerobe, Inc., owns and operates jewelry counters in McRae's department stores, which are located throughout the Southeast. In the summer, Migerobe contacted Gerald Murff, a Certina salesperson from whom it had previously purchased watches. It notifi ed him that Migerobe was interested in buying Certina watches if the company decided to sell a large portion of its inventory at reduced prices. Migerobe had some reason to believe that Certina had excess inventory, and Certina in fact decided to eliminate its inventory as a result of a corporate decision to withdraw its watches from the U.S. market. Migerobe was hoping to acquire the Certina watches so that they could be used as "doorbusters" for an after-Thanksgiving sale. Doorbusters or "loss leaders" are items offered at a low price which are designed to increase the traffi c fl ow through a store and, thereby, increase corollary sales (the sale of nonadvertised items). On October 29, the parties agreed on the sale of over 2,000 watches at a price of $45 per watch. On November 4, the national account manager for Certina called Migerobe to say that Certina would not ship the watches. Migerobe brought suit against Certina to recover the damages for breach of contract, including consequential damages in the form of lost profi ts on corollary sales. Migerobe asserted that the Certina salesperson was aware of its plan to use the watches as a loss leader by featuring them in a doorbuster Thanksgiving advertisement at a 50 percent discount. It also had data that showed it previously had increased its corollary sales by 69 to 87 percent when it had used similar doorbuster promotions. Was Migerobe entitled to recover the lost profi ts on corollary sales as consequential damages caused by Certina's breach of contract?



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  • CreatedJuly 16, 2014
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