## Facts

- Eastern Cement Corporation purchased a single pneumatic cement-pumping system from Halliburton Company under sales documents containing an express warranty and a purported warranty disclaimer.
- The system allegedly failed to perform as warranted, causing operational problems; Eastern accepted the system and later sued for breach of warranty.
- Eastern sought consequential damages, including more than \$24 million in alleged lost profits tied to a planned expansion into a containerized-cargo business.
- The lost-profits theory assumed that, if the system had worked, Eastern would have purchased four additional systems from Halliburton and used them in a new containerized-cargo venture supported by a long-term vessel charter.
- Eastern presented testimony about its intent to expand and expert economic projections of future profits for the prospective venture.
- There was no contract for the additional four systems, no finalized vessel-charter agreement, and no concrete documentation establishing an existing containerized-cargo enterprise.
- After remand from an earlier appeal, a jury found Halliburton liable and awarded damages including substantial lost profits for the proposed venture.

## Issues

1. Whether the contractual warranty disclaimer barred Eastern’s warranty claims, or whether implied warranties applied.
2. Whether Eastern could recover consequential lost profits for a prospective, unestablished containerized-cargo venture based on projected future purchases and contingent business events.
3. What limits reasonable certainty and proximate causation impose on UCC consequential damages claims for lost profits.

## Decision

- The court affirmed Halliburton’s liability for breach of warranty, treating the disclaimer issue as resolved by the earlier appeal.
- The court reversed the portion of the judgment awarding lost profits tied to the proposed containerized-cargo venture.
- The court held the claimed lost profits were too remote, speculative, and theoretical given the absence of contracts, commitments, or reliable measures of expected profitability for the new venture.
- The court remanded with instructions to strike the lost-profits component and enter judgment for proven consequential damages only, in the amount of \$928,000.

## Legal Principles

- Under Florida’s UCC, a buyer may recover incidental and consequential damages for breach of warranty, including lost profits, only if the damages are proximately caused by the breach, foreseeable, and proven with reasonable certainty.
- Lost profits are not recoverable when they depend on a chain of contingent future decisions and events that weakens proximate causation and makes measurement unreliable.
- Claims for profits from a new or unestablished business require objective evidence supplying a reliable basis (a “yardstick”) to quantify profits with reasonable certainty; unsupported projections and assumptions are insufficient.
- Courts may treat the recoverability of a category of lost profits as a threshold legal question before evaluating the sufficiency of particular expert calculations.

## Conclusion

The court upheld breach-of-warranty liability but limited damages by rejecting speculative lost profits from a prospective new business venture, allowing recovery only for consequential losses tied to the defective system and proven with reasonable certainty.


Halliburton Co. v. E. Cement Corp., 672 So. 2d 844 (Fla. 4th DCA 1996)