## Facts

- Great American Music Machine, Inc. (GrAMM) was formed to promote singer-songwriter Ralph H. Harrison, an unknown performer, and to market his album “Free Spirit Movin’.”
- Plaintiffs financed production of a master tape costing $31,088 and planned to market records while raising capital through a public stock offering.
- In February 1972, GrAMM orally contracted with Mid-South Record Pressing Company to press and package the album, including a mail campaign and distributor shipment.
- Plaintiffs approved a test pressing, after which Mid-South produced and shipped thousands of copies; many were allegedly defective and unplayable.
- Mid-South later produced and mailed additional records to correct earlier defects; plaintiffs accepted the second shipment.
- Plaintiffs withheld payment of Mid-South’s open-account balance ($13,025.39) and sued for breach of contract and implied warranty, seeking extensive consequential damages, including alleged loss of a $500,000 underwriting commitment.
- Mid-South counterclaimed for the unpaid $13,025.39.
- Evidence at trial included testimony that the album had little market potential even if properly pressed; plaintiffs’ projections of commercial success and financing depended on uncertain assumptions.

## Issues

1. Whether defective pressings amounted to breach of contract and breach of implied warranty.
2. Whether plaintiffs proved consequential damages (lost venture value, lost underwriting, promotional and development expenses) with reasonable certainty and sufficient causal connection to the defective pressings.
3. Whether the claimed consequential losses were reasonably foreseeable and within the parties’ contemplation when contracting for record pressing and mailing.
4. Whether Mid-South was entitled to recover the stipulated unpaid open-account balance, subject to any offset.

## Decision

- The court largely rejected plaintiffs’ consequential-damages claims as speculative and unsupported by reliable proof of market value, lost profits, or causation.
- The court found plaintiffs failed to show that Mid-South’s defective pressings caused the collapse of the broader business and financing plan, including the alleged underwriting commitment.
- The court limited plaintiffs’ recovery to modest, specifically proven losses directly attributable to the defective pressings.
- The court granted Mid-South’s counterclaim for $13,025.39, with any proven damages to plaintiffs applied as an offset, resulting in Mid-South as the principal monetary winner.

## Legal Principles

- Contract plaintiffs bear the burden to prove damages, including lost profits, with reasonable certainty; optimistic projections and unverified market assumptions are insufficient.
- Consequential damages require proof of causation linking the breach to the claimed loss; failure of a broader venture will not be attributed to a breach absent persuasive evidence.
- Even where breach is shown, recovery is limited to losses that are foreseeable and within the parties’ contemplation at contract formation.
- Courts distinguish direct, provable costs caused by defective performance from speculative “venture-level” losses tied to an uncertain business plan.

## Conclusion

The court confined recovery to small, proven, direct damages from defective record pressings and denied sweeping consequential damages tied to an uncertain marketing and financing venture because plaintiffs did not establish an appreciable market, reasonable certainty, foreseeability, or causation; Mid-South recovered the unpaid contract balance subject to offset.


Great Am. Music Mach., Inc. v. Mid-S. Rec. Pressing Co., 393 F. Supp. 877 (M.D. Tenn. 1975)