Applied Data Processing, Inc. v. Burroughs Corp., 394 F. Supp. 504 (D. Conn. 1975) (full-text).
Factual Background Edit
Applied Data Processing, the lessee of certain data processing equipment brought suit against Burroughs, the lessor, for damages for breach of express and implied warranties and for tortious misrepresentation. The contract between the parties contained a limitation on consequential damages clause.
Trial Court Proceedings Edit
Despite a contractual limitation on consequential damages provision, the trial court decided that Burroughs could be held liable for the expenses incurred by the purchaser in converting to the new computer system, which failed to operate properly and eventually had to be replaced. The court found that since Burroughs failed to supply the system it promised, the plaintiff could recover as reliance damages those costs incurred in anticipation of the successful operation of the new equipment.
As a result, Applied Data could recovered the costs of converting their IBM programs to a format acceptable to the Burroughs machine, including supplies, staff training, labor, software costs, the cost of transporting the Burroughs computer to their premises and the cost of wiring for the new machine.