## Facts

- Whitesell Corporation supplied cold-headed/threaded fasteners and related parts to Whirlpool under a long-term requirements relationship.
- The parties’ 2002 Strategic Alliance Agreement (SAA) ran through 2007 with automatic one-year renewals unless timely terminated.
- The SAA positioned Whitesell as Whirlpool’s strategic supplier for Whirlpool’s “volume requirements” of covered fastener parts, with exhibits listing covered parts and divisions.
- The SAA did not define key terms, including “volume requirements” and “manufacturing facility.”
- The SAA included a broad limitation-of-liability clause stating Whirlpool would not be liable for anticipated profits or incidental or consequential damages, or for any loss or damage arising from performance, breach, termination, or expiration.
- Whitesell alleged Whirlpool breached by sourcing covered parts from other suppliers or internally rather than purchasing its requirements from Whitesell, including purchases characterized as “safety stock” and purchases associated with the Benton Harbor facility.
- A jury awarded Whitesell substantial lost-profits damages; the district court entered judgment totaling $33,134,281 after interest adjustments.

## Issues

1. Whether the SAA’s damages-limitation clause was enforceable under U.C.C. § 2-719 (as applied under Michigan law) when it would bar the seller from recovering damages for the buyer’s failure to purchase under a requirements contract.
2. Whether the evidence and contract scope permitted lost-profits recovery for (a) safety-stock purchases and (b) purchases tied to the Benton Harbor facility.
3. Whether the district court correctly calculated and applied prejudgment and post-judgment interest.

## Decision

- The Sixth Circuit affirmed the judgment in all material respects.
- The court held the damages-limitation clause unenforceable as applied because it deprived Whitesell of any meaningful remedy for Whirlpool’s alleged core breach (failure to purchase required volumes).
- With the clause invalid, default U.C.C. remedies permitted Whitesell to seek lost profits for Whirlpool’s non-purchases.
- The court upheld the inclusion of safety stock and Benton Harbor-related volumes in the lost-profits award, treating key scope questions as fact-bound and supported by the trial record.
- The court rejected Whitesell’s cross-appeal and affirmed the district court’s application of prejudgment and post-judgment interest.

## Legal Principles

- Under U.C.C. § 2-719, contractual limitations on remedies or damages may be unenforceable if they fail of their essential purpose or leave the aggrieved party without a minimum adequate remedy for breach.
- A damages-limitation provision that effectively eliminates recovery for a buyer’s failure to purchase under a requirements contract may be struck, restoring default U.C.C. remedies.
- When a buyer wrongfully fails to purchase required goods, a seller may recover lost profits under U.C.C. Article 2 principles (including lost-profit measures for sellers capable of supplying the additional volume).
- Undefined or ambiguous requirements-contract terms (e.g., “volume requirements” and facility coverage), evaluated alongside exhibits and course-of-dealing evidence, can present jury questions when supported by sufficient evidence.

## Conclusion

The Sixth Circuit affirmed a $33.13 million judgment for Whitesell, holding that a sweeping damages-limitation clause could not be enforced to strip the seller of a meaningful U.C.C. remedy for Whirlpool’s failure to purchase under a requirements contract, and sustaining the jury’s lost-profits award (including safety-stock and Benton Harbor-related volumes) and the district court’s interest determinations.


Whitesell Corp. v. Whirlpool Corp., Nos. 10-1702 & 10-1761, 2012 WL 3631491 (6th Cir. 2012)