Reference no: EM131650459

Rotorex, a New York corporation, agreed to sell air compressors to Delchi, an Italian company. The compressors were for use in producing Ariele air conditioners. The first shipment reached Delchi, and Delchi paid $188,000. In preparation, Delchi had spent 39 million lire for special tooling, and 27 million lire for special insulation and tubing for use in making Arieles. Delchi expended 18 million lire in shipping and customs duties. Delchi then paid $130,000 to Rotorex for a second shipment. While the second shipment was en route, Delchi discovered that the first lot was non-conforming. It rejected the compressors and canceled the contract. Delchi spent several million lire to replace problem grommets, inspect, repair, and retest the compressors in an effort to make them usable. During this time, Delchi's assembly line shut down, incurring unproductive assembly worker wages. Delchi was able to obtain some substitute compressors from other sources in time for the selling season, which it had to adapt for Ariele units at additional expense. It arranged to have a shipment of Sanyo compressors, which it has previously ordered, sent to it by air freight so that it could fill some orders. Delchi was also unable to fill some orders, amounting to millions of lire in lost profit. Delchi brought this action for damages. What expenses should Delchi be allowed to recover from Rotorex as a result of its delivery of nonconforming and why? How should the court measure each element of damages? Delchi Carrier, SpA v. Rotorex Corp., 1994 WL 495787 (N.D.N.Y. 1994).