## Facts

- Great Lakes Heat Treating Co., a newly formed commercial heat-treating business, contracted with AGF, Inc. to purchase an automated “284 Shaker Hearth Furnace” represented as capable of processing about 500 pounds of parts per hour.
- The furnace was delivered in January 1980 and initially could not be assembled because parts did not fit properly; AGF was notified and sent a technician.
- After assembly, the furnace repeatedly malfunctioned and never consistently achieved the promised throughput, despite at least six repair attempts by AGF.
- Great Lakes withheld the remaining contract balance; AGF sued for the unpaid price.
- Great Lakes counterclaimed for breach of warranty and sought lost profits allegedly caused by the furnace’s underperformance.
- At trial, Great Lakes offered lost-profits proof through customer testimony, the owner’s testimony, and a CPA’s projections based in part on records and data from similar enterprises; the trial court excluded key portions of this evidence.

## Issues

1. Whether Great Lakes provided sufficient notice of breach under Ohio Rev. Code § 1302.65(C)(1) (UCC 2-607(3)(a)) to preserve remedies for breach of warranty.
2. Whether a new business may recover lost profits for breach of contract in Ohio and, if so, what evidence can establish those profits with reasonable certainty.

## Decision

- The Ohio Supreme Court held Great Lakes gave adequate notice of breach; no specific words or formal notice were required, and repeated complaints coupled with AGF’s repair efforts satisfied the statute.
- The court held a new business is not categorically barred from recovering lost profits; such damages are recoverable if proven with reasonable certainty.
- The court ruled the trial court unduly restricted Great Lakes’ lost-profits evidence, including expert testimony relying on comparable-business data.
- The judgment was reversed in part and the cause remanded for further proceedings consistent with the opinion, particularly on lost-profits damages.

## Legal Principles

- Under Ohio Rev. Code § 1302.65(C)(1), a buyer’s notice of breach need not follow any specific form; practical communications that inform the seller of the problem and allow an opportunity to cure can satisfy the requirement.
- In Ohio, a new business may recover lost profits in a breach-of-contract action, but the profits must be established with reasonable certainty.
- Reasonable certainty does not require mathematical precision; it requires evidence sufficient to avoid purely speculative awards.
- Lost profits for a new business may be proven through expert testimony, economic and financial data, market surveys and analyses, records of similar enterprises, and other relevant facts; expert reliance on such material is not automatically inadmissible solely because the underlying data were not independently admitted.

## Conclusion

The court confirmed that informal, repeated complaints and repair efforts can satisfy UCC notice of breach, and it rejected a per se rule against new-business lost profits, requiring instead that such damages be supported by reasonably certain evidence, including expert analysis grounded in comparable-business and market data.


AGF, Inc. v. Great Lakes Heat Treating Co., 51 Ohio St. 3d 177, 555 N.E.2d 634 (Ohio 1990)