Summary
The Eleventh Circuit reviews a district court's judgment in a breach of contract dispute involving a fixed-price sales contract for organic tapioca starch. The court addresses whether the contract incorporated the seller's general terms and conditions and whether a limitation of liability clause barred the buyer's recovery of cover and lost-profit damages. The appellate court holds that the terms were incorporated but the limitation clause only bars special consequential, incidental, or exemplary damages, vacating and remanding for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the sales contract incorporated Meelunie's general terms and conditions by reference.
- Whether the incorporated limitation-of-liability provision barred Sweet Additions from recovering lost profits and the cost of substitute products, or barred those damages only when they were special, consequential, incidental, or exemplary rather than direct damages.
Holdings
- The sales contract incorporated Meelunie's general terms and conditions because it expressly stated that Meelunie's general sales conditions applied, provided a means to obtain them, and the parties' prior course of dealing showed that Sweet Additions had received and assented to the terms.
- The limitation-of-liability provision did not categorically bar recovery of lost profits or the cost of substitute products. It barred those damages only to the extent they were special consequential, incidental, or exemplary damages; Sweet Additions could recover them if they were direct damages and otherwise complied with the provision's total cap.
Key quotations
“the Sales Contract incorporates the T&Cs, but the limitation of liability does not completely prevent Sweet Additions from recovering damages in this lawsuit.” (Opinion p. 12)
“the limitation of liability bars their recovery only to the extent that those damages are consequential, incidental, or exemplary.” (Opinion p. 20)
“Sweet Additions may recover lost profits and the costs of substitute products to the extent that those damages are direct and otherwise satisfy the provision’s total cap on recoverable damages.” (Opinion p. 33)
Factual background
In September 2019, the parties entered a fixed-price contract for Meelunie to supply Sweet Additions nearly 20 million pounds of organic tapioca starch during 2020. The contract stated that Meelunie's general sales conditions applied, and Sweet Additions had previously received and paid invoices governed by those terms. Shipping and supply problems worsened during the COVID-19 pandemic; after Meelunie indicated that performance might require Sweet Additions to bear higher shipping costs, Sweet Additions declined, obtained replacement product from another supplier at a higher price, and declared a material breach.
Procedural history
Sweet Additions sued Meelunie for breach of contract and breach of the implied covenant of good faith and fair dealing after Meelunie allegedly failed to deliver the full quantity of tapioca starch required by a fixed-price sales contract. Meelunie counterclaimed for unpaid product invoices and related interest. After largely denying the parties' cross-motions for summary judgment, the district court held a bench trial, rejected Sweet Additions's claims, and entered judgment for Meelunie. Sweet Additions timely appealed after denial of its post-trial motion.
Remand instructions
Vacate the district court's judgment and remand for further proceedings consistent with the opinion, including determining whether Sweet Additions's claimed lost profits and substitute-product costs are direct damages and otherwise fall within the contractual cap, and resolving the remaining breach issues as appropriate.