A manufacturer of dairy silos and a distributor of such silos entered into an exclusive distribution agreement covering 13 Latin American countries. The agreement specified that the manufacturer would refrain from selling silos to third parties in the covered countries. Despite this, the manufacturer completed almost $4 million in direct sales in the covered countries during the time of the agreement. When the distributor sued, the manufacturer argued that the agreement expressly prohibited recovery of lost profits. The district court and appellate court found that this portion of the contract was unconscionable under Wisconsin’s interpretation of the Uniform Commercial Code, and awarded damages to the distributor as a result.
Walker Stainless Equipment, Co., LLC, and its affiliates, manufacture dairy silos. Sanchelima International, Inc. and its affiliate, sell dairy silos in Latin America. After decades of doing business together, Walker and Sanchelima entered into an agreement in 2013 providing that Sanchelima would be the exclusive distributor of Walker’s products in 13 Latin American countries. Walker agreed not to sell silos directly to third parties in those thirteen countries. Continue reading ›