In a faxed letter dated May 23, 1988, Delchi cancelled the contract. Rotorex refused, claiming that the performance specifications were "inadvertently communicated" to Delchi.
After several unsuccessful attempts to cure the defects in the compressors, Delchi asked Rotorex to supply new compressors conforming to the original sample and specifications. On May 13, after a Rotorex representative visited the Delchi factory in Italy, Delchi informed Rotorex that 93 percent of the compressors were rejected in quality control checks because they had lower cooling capacity and consumed more power than the sample model and specifications. While the second shipment was en route, Delchi discovered that the first lot of compressors did not conform to the sample model and accompanying specifications. Delchi also remitted payment for this shipment by letter of credit. Rotorex sent a second shipment of compressors on or about May 9. Delchi paid for this shipment, which arrived at its Italian factory on April 20, by letter of credit. Rotorex sent the first shipment by sea on March 26. The compressors were scheduled to be delivered in three shipments before May 15, 1988. Prior to executing the contract, Rotorex sent Delchi a sample compressor and accompanying written performance specifications.
The air conditioners were scheduled to go on sale in the spring and summer of 1988. In January 1988, Rotorex agreed to sell 10,800 compressors to Delchi for use in Delchi's "Ariele" line of portable room air conditioners. We affirm the award of damages we reverse in part on Delchi's cross-appeal and remand for further proceedings. Delchi cross-appeals from the denial of certain incidental and consequential damages. The basis for the award was Rotorex's delivery of nonconforming compressors to Delchi, an Italian manufacturer of air conditioners. Rotorex Corporation, a New York corporation, appeals from a judgment of $1,785,772.44 in damages for lost profits and other consequential damages awarded to Delchi Carrier SpA following a bench trial before Judge Munson.
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