therefore evidence of such an agreement may not be considered.
440 M.C.L. § 2202.
A divisible contract is, for example, one that is composed
of independent monthly parts, the performance of any one of
which will bind the other party pro tanto. Integrity Flooring
v. Zandon Corporation, 130 N.J.L. 244, 32 A.2d 507, 509 (1943).
The effect of a breach of contract depends in large part
upon whether the contract is to be regarded as indivisible or
divisible. Thus, although this action was filed in January of
1973, as the contract is divisible, it would be arbitrary to
disallow recovery of damages accrued beyond that month where
there is adequate evidence to support the damage claims, the
damages are certain of computation, and the breaches do not
differ in any significant respect from those that preceded
January, 1973. However, where the evidence of future damages,
accrued (from January, 1974 through trial) and not accrued
(from trial through March, 1975), consists solely of a
speculative projection, it would be equally as arbitrary to
award damages, particularly where such damages could be
established, with certainty, in the near future.
Under the Uniform Commercial Code, the buyer's damages for
nondelivery of goods consist of the sum of contract-cover or
contract-market differential, incidental damages (expenses
reasonably incurred), and consequential damages (any loss
resulting from general or particular requirements and needs of
which the seller had reason to know at the time of contracting
and which could not be prevented by buying substitute goods or
otherwise), less the expenses saved as a result of the
From time to time during the period for which damages are
sought, Chemetron advised McLouth that it was incurring
substantial damages as a result of McLouth's failure to supply
it with sufficient quantities of liquid product; that the
damages consisted of the higher cost of obtaining product from
other sources and shipping that substitute product to Detroit.
Chemetron proved the specific amount of these damages based on
its cost records which included, the price of the product
purchased from other sources, the recognized value of product
obtained in trade, and the cost of shipping the product by
common carrier. With respect to liquid product obtained from
Chemetron's own plants or shipped in Chemetron's own trucks,
the cost was based on Chemetron's standard production cost for
the plant from which the product was obtained and the standard
mileage and wage rates for shipping, using standards
calculated annually by Chemetron in the regular course of its
business. Against this, Chemetron set off the price it would
have paid McLouth for the product under the terms of the
contract plus the cost for shipping from McLouth's plant in
Trenton, Michigan had McLouth supplied the product. 440 M.C.L.
Beginning no later than November, 1972, Chemetron could have
sold the maximum 1,950 tons of liquid product guaranteed by
McLouth.*fn23 However, Chemetron was unable to obtain a total
of 1,950 tons from all sources, including McLouth. As a
result, Chemetron lost sales it could have transacted, and had
not only to reject customer orders for additional quantities,
but, beginning in April, 1973, had to allocate product on the
basis of 50 to 80 percent of its customers' needs. Chemetron
is entitled to recover damages for the profits it lost,
because McLouth, having known at the time the contract was
executed that Chemetron would be purchasing liquid
product from McLouth for the purpose of resale, did not supply
such product in sufficient quantities. 440 M.C.L.A. § 2715,
Official U.C.C. Comment 6. These lost profits were properly
calculated on the basis of the average selling price in Detroit
less both the price Chemetron would have paid McLouth and a
prorata share of Chemetron's distribution costs.*fn24
Swiss-American Importing Co. v. Variety Food Products Co.,
471 S.W.2d 688 (Mo.Ct.App. 1971).
McLouth presented no evidence to refute any of the evidence
of damages Chemetron incurred from April, 1970 through
December, 1973. Instead, it argued that Chemetron's business
records, rather than the summaries prepared from them, should
have been introduced as the evidence of such damages. McLouth
did not deny that all of the underlying records had been made
available to it during discovery, and again during the course
of the trial. In such circumstances, the use of summaries is
completely adequate and proper. Youngs Drug Products Corp. v.
Dean Rubber Mfg. Co., 362 F.2d 129, 134 (7th Cir. 1966); Peter
Kiewit Sons' Co. v. Summit Const. Co., 422 F.2d 242, 267 (8th
Cir. 1969); Fairchild Stratos Corp. v. Lear Siegler, Inc.,
337 F.2d 785, 794 (4th Cir. 1964); Regents of Univ. of Colorado v.
K.D.I. Precision Products, Inc., 488 F.2d 261, 268 (10th Cir.
As evidence of damages for the period January, 1974 through
March, 1975, Chemetron offered a projection based on data from
the months January through December, 1973. This projection has
as its key assumption the notion that the conditions which
existed during the first eleven months of 1973 will, on the
average, exist during the fifteen-month period beginning
January, 1974. Specifically, Chemetron has assumed that on the
average, in the future fifteen months as in the past eleven
months, McLouth will continue to supply the same quantities,
Chemetron will continue to need the same quantities, McLouth
will continue to need the same quantities, liquid product
prices will remain the same, freight costs will remain the
same, and Chemetron will continue to obtain substitute product
from the same sources. There is simply no record support for
these assumptions, and thus the projection would not be a
"just and reasonable" basis upon which to award such damages,
Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264, 66 S.Ct.
574, 90 L.Ed. 652 (1946), particularly where such damages
could be established, with certainty, in the near future.
Accordingly, for breaches of contract from April, 1970
through December, 1973, Chemetron is entitled to recover from
McLouth damages in the following amounts: cost differential
damages of $387,314 for increased cost of product; incidental
damages of $236,250 for increased freight costs; and
consequential damages of $247,929 for lost profits.
The foregoing memorandum of decision is intended to satisfy
the requirements of Rule 52(a) of the Federal Rules of Civil