United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

Nos. 99-1052 and 99-1267 

___________

Best Buy Co., Inc., *

*

Plaintiff-Appellant/ *

Cross-Appellee, *

* Appeals from the United States

v. * District Court for the

* District of Minnesota.

Fedders North America, Inc., *

*

Defendant-Appellee/ *

Cross-Appellant. *

___________

Submitted: November 18, 1999

Filed: February 2, 2000

___________

Before BOWMAN, LAY, and HANSEN, Circuit Judges.

___________

LAY, Circuit Judge.

Best Buy Co., Inc. (Best Buy) appeals the district court’s denial of damages in

its breach of contract suit against Fedders North America, Inc. (Fedders). We affirm

in part, reverse in part, and remand.
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I. Background

Best Buy, a Minnesota corporation, is a retail operation that sells a variety of

household goods, including window unit air conditioners. Fedders is a wholly-owned

subsidiary of Fedders Corporation, a Delaware corporation. Fedders manufactures

window unit air conditioners. In the fall of 1993, the parties entered into a written

contract where Fedders would sell Best Buy window units and the latter would then

resell them during the following summer. This agreement, known as the 1994 Program,

provided for product costs, payment terms, and freight charges. Most importantly for

purposes of this appeal, the contract also included an “Inventory Assistance” provision

(IAP) which provided:

Inventory Assistance - Fedders is offering Best Buy an Inventory

Assistance program for 1994.

Any of the five “core” models that Best Buy has in inventory on June 30th

can be returned for full credit. The units must be in factory sealed

cartons.

This provision was inserted into the 1994 Program largely at the insistence of Best Buy,

which had previously refused to do business with Fedders because of Fedders’ failure

to provide an acceptable return policy, and was sought as assurance that it would not

end up with a huge inventory at the end of the season. 

The 1994 season came and went without incident, and the parties entered into

subsequent one-year programs for the 1995 and 1996 seasons. The language in the IAP

remained the same with the exception that the covered “core” models changed from

year to year. 
1We note that the district court calculated the cost value of the units to be

$3,867,725. We are not certain how the court came to this amount. Best Buy’s

damage calculations for this suit show that in September of 1996, Best Buy’s core

model inventory was valued at a cost of $3,988,863. Fedders does not dispute this

valuation. Since the district court states in its Findings of Fact that Best Buy eventually

realized $442,850 on the sale of these units, and this calculation is consistent with a

finding that the inventory was valued at $3,988,863, we will assume that the lower

court intended to use the $3,988,863 figure.

2This is the cost value of the remaining core models, not the estimated retail

value.

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Pursuant to the 1996 Program, Fedders sold Best Buy $3,988,863 in core model

units.1 However, the summer of 1996 was unusually cool, and Best Buy’s sell-through

rate was not as good as in previous years. As a result, Best Buy attempted to invoke

the IAP for the first time in 1996. Best Buy representatives contacted Fedders in midJuly of 1996 and requested Fedders take back the unsold core models and refund Best

Buy the purchase price. Fedders refused. A meeting was held on July 23, 1996 to

discuss the returns. During this meeting, Fedders’ representatives stated that they

would not accept the unsold units because, under the IAP, any such request needed to

have been made by June 30, 1996, and the models shipped by July 10, 1996, in order

to receive a full refund. Fedders claimed that these return deadlines were agreed upon

orally as part of the IAP during its presentation of the 1994 Program and asserted that

because the terms of the IAP remained unchanged throughout the parties’ three-year

relationship, the deadlines remained unchanged. Two Best Buy representatives present

at the July 23 meeting testified to the effect that, up until that time, they were unaware

of any return deadlines under the IAP. As of February of 1998, Best Buy still held

unsold core model inventory valued at $232,259.2

Best Buy commenced this action in Minnesota state court on January 14, 1997.

On February 12, 1997, Fedders removed the action to federal district court pursuant to

28 U.S.C. § 1441(a), alleging diversity jurisdiction under 28 U.S.C. § 1332(a)(1). At
3Best Buy’s damages were broken down as follows:

Markdown Damages $102,309

Advertising Expense $ 6,268

Damage Write Off & 

 Inventory Shrink $ 42,356

Store Labor $ 9,287

Storage Costs $ 88,251

Shipping Costs $ 57,265

Carrying Costs $341,752

4Fedders’ claims that Best Buy only realized $432,850 in the sale of the units,

not $442,850. This is an error in Fedders’ calculations. Fedders’ brief states at page

31 that the original purchase price of the core models was $3,998,863. However, as

was noted earlier in this opinion, the actual purchase price was $3,988,863. This is the

source of Fedders’ $10,000 error in calculating Best Buy’s sale profits. Regardless of

the miscalculation, Fedders should take comfort in the fact that the error is actually in

its favor.

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trial, the court received parol evidence on the IAP and the alleged return deadlines.

Best Buy sought damages in the amount of $880,107.3

The district court issued its Order for Judgment on November 25, 1998.

Rejecting Fedders’ contention that the return deadlines were part of the IAP, the court

held that Fedders breached the contract by refusing to accept the core models.

However, relying on Minnesota statutes, the district court held that § 336.2-706(1)

dictated Best Buy’s available remedies and limited its damages to the difference

between the total resale price and the contract price, plus incidental damages less

expenses saved as a consequence of the breach. Because Best Buy successfully sold

some of the remaining inventory at a profit of $442,850,4 the first part of the damages

equation (resale price minus contract price) revealed no damages. The court then

stated that any incidental damages suffered by Best Buy were outweighed by the

expenses it saved as a consequence of the breach. Specifically, the court mentioned
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the fact that under both the terms of the contract and the UCC, Best Buy was

responsible for the attendant cost of shipping the unsold core models back to Fedders.

Because Fedders breached by refusing to accept the models, Best Buy escaped any

financial responsibility for their return.

In this appeal, Best Buy has abandoned its damage claims with the exception of

$444,061, representing the markdown damages and carrying costs. Best Buy seeks

either a reversal and remand with direction to enter judgment in its favor for an amount

not less than $444,061 or a remand for recalculation of damages. Fedders crossappeals the district court’s finding of breach.

II. Discussion

A. Fedders’ Cross-Appeal

On cross-appeal Fedders challenges the district court’s finding that the return

deadlines were not “expressly incorporated” into the 1996 Program’s IAP and its

holding that Fedders breached by refusing to accept the units. In particular, Fedders

faults the lower court for failing to give proper consideration to all its parol evidence,

especially the testimony of Thomas Purcell, Senior Vice President of Sales and

Marketing at Fedders (Purcell). Purcell was one of two Fedders employees who

attended the 1993 meeting where the return deadlines were allegedly articulated.

Purcell testified that he told Best Buy about the return deadlines during that meeting

and that, to ensure understanding, he carefully explained the reasoning behind the

deadlines. The district court rejected his testimony, along with the rest of the parol

evidence offered, stating that it undermined rather than supported Fedders’ position.

The court found that Purcell’s testimony “stood alone” for the argument that the return

deadlines were included in the IAP and the testimony contrasted the written agreement.
5Fedders lists six pieces of evidence in support of Purcell’s testimony. They are:

(1) Purcell’s memo to Fedders’ president, prepared shortly after the 1993 meeting,

stating that Best Buy’s representative “was pleased with the core model return on June

30th provision”; (2) Purcell’s testimony that he told management after the 1993 meeting

that he had explained the return deadlines to Best Buy, evidenced by Fedders’ deal

sheet for the 1994 Program which contains a handwritten note stating “June return on

core models is in place”; (3) testimony of Thomas Kroll, corporate controller for

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1. Purcell’s testimony

The “uncorroborated” nature of Purcell’s testimony is a question of fact which

this court reviews for clear error. See City Nat’l Bank of Fort Smith v. Unique

Structures, Inc., 49 F.3d 1330, 1333 (8th Cir. 1995). 

The district court received parol evidence in this case in an attempt to “resolv[e]

the ambiguity presented by the inventory assistance program in light of the parties’

positions,” (Ct. Order at 4), and “explain the ‘Inventory Assistance’ portion of the

agreement, especially as it relates to the June 30th date.” (Ct. Order at 11). Under

Minnesota Statute § 336.2-202, parties are barred from bringing evidence of any prior

agreement or a contemporaneous oral agreement which contradicts the terms of a final,

written contract. However, explanatory or supplemental evidence of the course of

dealing or course of performance by the parties is admissible, as is evidence of

consistent additional terms unless the writing is intended by the parties to be a complete

and exclusive statement of the terms of the agreement. MINN.STAT.§ 336.2-202(a)-(b)

(1998). 

Neither Best Buy nor Fedders challenge the admission of the parol evidence.

Rather, the foundation of Fedders’ cross-appeal is the court’s allegedly insufficient

consideration of the parol evidence. Fedders claims the district court was clearly

erroneous in its finding that Purcell’s testimony “stood alone,” because the court failed

to consider other evidence that supported the testimony.5

 
Fedders Corp., stating that a group of Fedders’ managers had discussed the fact that

the 1994 Program contained a June 30 notification date and a July 10 return date; (4)

testimony of George Stadler (Stadler), another attendee of the 1993 meeting and

Fedders employee, that he believed Best Buy was required to notify Fedders by June

30 and return the product “[s]ometime in July”; (5) Fedders’ inventory tracking system

and Inventory Weekly Report, which was only used with the Best Buy account because

of the IAP; and (6) testimony of Purcell and Stadler describing communications

between Best Buy and Fedders representatives in May and June of 1996 regarding Best

Buy’s plans for its remaining inventory. (Fedders Br. at 24-25; Fedders Reply Br. at

16.)

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After reviewing the district court’s opinion, we find that the court was not clearly

erroneous in its factual findings. In the bench trial below, the district court judge was

the trier of fact. It is evident that the court weighed the extrinsic evidence and found

it insufficient to support Purcell’s testimony. See Jenson v. Eveleth Taconite Co., 130

F.3d 1287, 1299 (8th Cir. 1997) (credibility determinations are to be made by the trier

of fact); Pacyga v. FMC Corp., 581 N.W.2d 859, 861 (Minn. 1998) (same). As we see

nothing in the record that suggests this finding to be clearly erroneous, we are bound

to affirm it. 

2. Fedders’ breach

A district court’s interpretation of state law is subject to de novo review. See

Unique Structures, 49 F.3d at 1333 (citing Salve Regina College v. Russell, 499 U.S.

225, 231 (1991)). As we noted in the preceding subsection, we are bound by the

district court’s findings of fact regarding Purcell’s testimony. Thus, the question

becomes whether, upon independent review, there exists sufficient evidence of breach

to support the lower court’s decision. 

We find that the evidence presented is sufficient to support the finding that the

return provisions were not included in the 1996 Program. As both the district court and
6The court noted:

Mr. Purcell testified that each yearly program stood on its own and that

the terms of each yearly program did not carry over to the next year. He

also testified that Fedders’ company policy would not allow a sales

representative to orally change the Program after it had been issued from

headquarters and he believed that both parties relied on the written

Program to determine their obligations.

(Ct. Order at 6.) (emphasis added).

7This spreadsheet contained the payment terms, floor plans, and return policies

for six different unit manufacturers. Under Fedders’ return policy, Anderson wrote,

“100% return of ‘core’ models.”

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Best Buy pointed out, Purcell’s own testimony contained internal inconsistencies.6

Additionally, there is physical evidence and testimony by other individuals which also

refutes Fedders’ contention that the return provisions were “expressly incorporated”

into the 1996 Program. First, Tom Repinski (Repinski), National Market Reaction

Analyst for Best Buy and a former seasonal products buyer, testified that although he

dealt directly with Fedders during the 1995 and 1996 seasons, he was never notified

of a June 30 return date. He also stated that, in choosing a program for the upcoming

season, the chosen program superseded the old program. This testimony works against

Fedders’ argument that the return deadlines carried over from the 1994 Program.

Second, David Anderson (Anderson), National Marketing Manager for Best Buy and

former Senior Buyer, testified that he understood the 1996 Program to allow for “100%

return of ‘core’ models,” as evidenced by a handwritten spreadsheet he created in early

1996.7 Like Repinski, Anderson also stated that he was unaware of the return

deadlines for the 1996 season. This is further supported by the testimony of George

Stadler (Stadler), a Fedders employee closely involved with the Best Buy account.

Stadler stated that both Repinski and Anderson expressed surprise upon learning of the

return deadlines at the July 23, 1996, meeting.
8We recognize that this memo was sent after the 1993 meeting and, thus, after

Fedders alleges to have informed Best Buy of the return deadlines. Nevertheless, this

evidence supports the contention that return deadlines, should any exist, would

normally be written as opposed to oral. In fact, Fedders and Sears’ 1995 and 1996

written Programs specifically provided as much.

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Best Buy also presented evidence in the form of an October 25, 1994, memo

directed to Purcell from Fedders’ upper management asking that Best Buy’s written

program include the language: “[a]ny of the (X) core models that X has in inventory on

June 30, can be returned for full credit no later than July 10, 1995. These units must

be in factory sealed cartons.”8 Purcell testified that this language was never inserted

into either the 1995 or 1996 programs. Finally, Stadler, the individual at Fedders with

perhaps the most contact with Best Buy during the relevant seasons, testified that he

was never told by anyone at Fedders to revise the language of the 1996 Program. He

also stated that he was never told prior to July of 1996 that he should tell Best Buy that

product should be returned by a specified date. All this evidence is strong support for

the conclusion that the return deadlines were not a part of the 1996 Program; thus,

Fedders breached the agreement.

After detailed consideration of Fedders’ counter-evidence, we find it insufficient

to upset the district court’s holding on this issue. Although Stadler’s testimony is

somewhat useful in determining whether program terms carried over from year to year,

there is countervailing evidence that each new program stood independent of its

predecessor. Furthermore, even if Stadler’s testimony is accepted on this point,

Fedders still must establish that Best Buy was aware of the return deadlines in 1993,

and this it has failed to do. Thus, we affirm the lower court’s holding that because the

return deadlines were not part of the 1996 Program, Fedders breached the contract in

refusing to accept Best Buy’s tender of the core models.
9Minn. Stat. § 336.2-710 states:

Incidental damages to an aggrieved seller include any commercially

reasonable charges, expenses or commissions incurred in stopping

delivery, in the transportation, care and custody of goods after the buyer’s

breach, in connection with return or resale of the goods or otherwise

resulting from the breach.

MINN. STAT. § 336.2-710 (1998).

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B. Best Buy’s Remedies

The district court, relying primarily on Minnesota statutory law and the parties’

agreement, held that Best Buy assumed the role of a seller when it chose to return the

unsold units and, as such, it was not entitled to consequential damages in accordance

with § 336.2-710.9 The court characterized the transaction as a “sale or return” under

Minnesota law. In so holding, the court relied on Minnesota law which states:

“[u]nless otherwise agreed, if delivered goods may be returned by the buyer even

though they conform to the contract, the transaction is a ‘sale or return’ if the goods are

delivered primarily for resale.” MINN. STAT. § 336.2-326(1)(b) (1998). Furthermore,

the court observed that the UCC defines a “person in the position of a seller” to include

“anyone who otherwise holds a security interest or other right in goods similar to that

of a seller.” MINN. STAT. § 336.2-707(1) (1998). The court used both of these UCC

provisions to classify Best Buy as a seller, thereby limiting Best Buy to incidental (as

opposed to incidental and consequential) damages under Minn. Stat. § 336.2-710.

Fedders urges that since Best Buy held title to the units before seeking this

return, Best Buy should be treated as a seller under the facts of this case. We

respectfully disagree with this characterization and reverse and remand the issue of

available remedies.
10Minn. Stat. § 336.2-401(2) provides: “Unless otherwise explicitly agreed title

passes to the buyer at the time and place at which the seller completes performance

with reference to the physical delivery of the goods . . . .” MINN. STAT. § 336.2-401(2)

(1998).

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First, we feel the district court misapplied § 336.2-326(1)(b). Comment 1 to

326.2-326 recites: “[t]he type of ‘sale or return’ involved herein is a sale to a merchant

whose unwillingness to buy is overcome only by the seller’s engagement to take back

the goods (or any commercial unit of goods) in lieu of payment if they fail to be

resold.” MINN. STAT. ANN. § 336.2-326, cmt. 1 (West 1966) (emphasis added). See,

e.g., National Iranian Gas Co. v. Basco Indus., Inc., 507 F. Supp. 563, 565 (E.D.La.

1981) (in denying plaintiff recovery for malfunctioning equipment, the court observed

“[t]he essence of the sale or return contract is the agreement that, upon delivery of the

goods, the buyer has the option to either pay the purchase price or return the items”).

The district court’s application overlooks the terms of the contract between the parties.

In this case, Fedders did not agree to accept the return units in lieu of payment. Rather,

money had already exchanged hands, and Best Buy sought the refund of this money

upon exercising its rights under the IAP. Thus, the 1996 Program was arguably not the

type of contractual relationship covered by § 336.2-326. 

Even if one could describe the agreement between Best Buy and Fedders as a

“sale or return,” we have difficulty seeing how that suddenly transforms Best Buy into

a seller and Fedders into a buyer. Relying on Minn. Stat. § 336.2-401(2) (1998),

Fedders argues that title passed to Best Buy when it accepted the initial delivery of the

units.10 By invoking the IAP, Fedders avers that Best Buy sought to pass title back to

Fedders, effectively “reselling” its units. 

Under the 1996 Program, it is true that Best Buy held title to the units it sought

to return in July of 1996, and it is equally indisputable that Best Buy sought to pass title

back to Fedders by invoking the IAP. Nevertheless, Fedders explicitly contracted with
11This subsection makes an exception for the requirements of good faith,

diligence, reasonableness, and care, which cannot be contracted away. The comment

to this section states that “an agreement can change the legal consequences which

would otherwise flow from the provisions of the Act.” MINN.STAT.ANN. § 336.1-102,

cmt. 2 (West 1966). 

12Minn. Stat § 336.2-326(4) states:

Any “or return” term of a contract for sale is to be treated as a separate

contract for sale within the statute of frauds section of this article (section

336.2-201) and as contradicting the sale aspect of the contract within the

provisions of this article on parol or extrinsic evidence (section 336.2-

202).

MINN. STAT. §336.2-326(4).

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Best Buy to give the latter the opportunity to send certain core models back in

exchange for the money it paid for them. Thus, the IAP acted as a conditional right of

return, allowing Best Buy to divest itself of title of units that met specific qualifications.

This right of return was a bargained-for term of the contract that Best Buy requested

and Fedders specifically created. This protective provision should not now be

interpreted so as to punish Best Buy. The IAP acted as a right and remedy in addition

to those buyer’s remedies which Best Buy is entitled to under the UCC. Such

interpretation is permissible under Minnesota Statute § 336.1-102(3) (1998), which

provides that the effect of UCC provisions may be varied by agreement.11 Therefore,

the mandates of § 336.2-401 do not necessitate a finding that Best Buy is relegated to

seller’s remedies in this instance.

Fedders further cites § 336.2-326(4) as support for its recharacterization of Best

Buy as a seller.12 We reject Fedders’ reading of this provision. Section 336.2-326(4)

does not stand for the broader proposition that any “or return” provision automatically

turns a buyer into a seller once it is utilized. Rather, § 336.2-326(4) merely requires

that any “or return” provision be written in order to be enforceable under the UCC’s
13Anderson on the Uniform Commercial Code states that the effect of an “or

return” provision is to rescind or cancel the sales transaction. 3A RONALD A.

ANDERSON, ANDERSON ON THE UNIFORM COMMERCIAL CODE § 2-327:30, at 476 (3d

ed. 1995). 

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Statute of Frauds. Moreover, in accordance with the parol evidence rule, an “or return”

provision must be in writing and made contemporaneously with or subsequent to the

writing at issue. This is due to the fact that an “or return” provision stands in

contradiction to ordinary terms of sale. Section 336.2-326(4) simply states that, for the

limited purposes of the Statute of Frauds and the parol evidence rule, an “or return”

provision is treated as a separate contract that must exist in writing. This reading is

supported by Comment 3 to § 336.2-326, which explains that “[s]ubsection (4) resolves

a conflict in the pre-existing case law by recognition that an ‘or return’ provision is so

definitely at odds with any ordinary contract for sale of goods that where written

agreements are involved it must be contained in a written memorandum.” MINN. STAT.

ANN. § 336.2-326, cmt. 3 (West 1966). The section says nothing about creating a new

transaction for purposes of calculating damages.13 For these reasons, we find neither

§ 336.2-401 nor § 336.2-326(4) support or require the reclassification of Best Buy as

a seller. 

Best Buy interprets § 336.2-326(4) in an even more limited fashion, arguing that

it is meant to address only creditor’s rights, not breach of contract issues. Anderson

on the Uniform Commercial Code lends credence to this position.

With respect to the creditors of the buyer, a delivery to the

buyer of goods, regardless of its intended character between

the parties, is treated as a sale or return when the buyer is a

regular dealer in that kind of goods. This is so when the

goods are delivered for sale to a person who maintains a

place of business at which that person[] deals in goods of

the kind involved under any name other than the name of the

seller or person making the delivery.
14We note that many of the cases from this circuit addressing § 336.2-326 do so

for purposes of determining creditor rights. For instance, in Weidinger Chevrolet, Inc.

v. Universal C.I.T. Credit Corp., 501 F.2d 459 (8th Cir. 1974), a car dealer kept cars

on its lot in a consignment-type relationship with the appellee Weidinger. The

appellant, C.I.T., foreclosed a security interest in the dealer’s property, including some

of Weidinger’s cars. Weidinger sued to recover the value of the cars, and this court

found that although Weidinger owned the cars, they were in the dealer’s possession

under a “sale or return” and were therefore subject to the claims of the dealer’s

creditors. Additionally, in First Nat’l Bank of Blooming Prairie v. Olsen, 403 N.W.2d

661 (Minn. Ct. App. 1987), one of the few Minnesota cases to address the UCC’s “sale

or return” provision, a feedlot owner entered into a loan agreement where the bank took

a security interest in the owner’s personal farm property, including livestock. Certain

cattle owners had delivered their cattle to Olsen without clarifying whether she could

sell them (as she was widely known to do) or giving any public notice of a retained

interest in the cattle. The bank eventually initiated a replevin action. The court,

holding that the relationship between the feedlot and cattle owners was a “sale or

return,” limited its § 336.2-326 inquiry to whether the cattle owners’ or the feedlot

owner’s creditors had a primary interest in the cattle as collateral. Finally, we note In

re Truck Accessories Distrib., Inc., 238 B.R. 444, 447 (Bankr. E.D.Ark. 1999), where

the court described § 336.2-326(3) as “designed to prevent creditors from being misled

by a hidden lien.”

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Anderson, supra, § 2-326:79, at 445 (emphasis added).14 Furthermore, Comment 1

explicitly states that § 336.2-326 does not address the issue of remedies for breach of

contract; rather, it is concerned with the option to refuse and return goods even though

they conform to the agreement. Consequently, we note that reliance on § 336.2-326(4)

may be inappropriate outside the buyer-creditor relationship. However, because that

specific issue is not before us, we decline to pass on it here.

Fedders cites Cole v. Melvin, 441 F. Supp. 193 (D.S.D. 1977) (mem.), to uphold

the repositioning of Best Buy as a seller. In that case, Cole agreed to buy sixteen

exotic heifers from Melvin for just over $3,000.00 each. The contract provided in

relevant part that “Melvin agrees to purchase same heifers at Four Thousand dollars
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each guaranteed safe in calf . . . .” Cole, 441 F. Supp. at 198. When Cole sought to

sell some of the pregnant cattle back to Melvin, Melvin refused to accept them. The

court held that Melvin became the buyer in the attempted return sale by Cole; thus,

Cole was limited to incidental damages as a seller.

Best Buy responds by citing Maxwell v. Crabtree Ford, Inc., 543 N.Y.S.2d 626

(N.Y.Just. Ct. 1989). In Maxwell, the plaintiff bought a new Jeep Wrangler from the

defendant. After months of difficulties with the automobile, she sought to return it to

the dealership. The dealership refused, and the plaintiff eventually sold the Jeep at a

loss. The court awarded the plaintiff buyer’s remedies under the UCC.

Maxwell is factually distinguishable as a case dealing with defective goods.

There is no question that a recipient of a defective good is entitled to buyer’s as

opposed to seller’s remedies. See MINN. STAT. §§ 336.2-608, 336.2-714 (1998); See

also Barry & Sewall Indus. Supply Co. v. Metal-Prep of Houston, Inc., 912 F.2d 252,

256-58 (8th Cir. 1990); Soo Line R.R. Co. v. Fruehauf Corp., 547 F.2d 1365, 1373

(8th Cir. 1977).

Cole is also distinguishable. The language of the contract at issue in that case

specifically provided that the defendant would “purchase” the goods, necessarily

contemplating a second sale between the parties. There is no such language found in

the 1996 Program. Rather, the program simply provided that any factory-sealed core

models “can be returned.” This language does not denote a second sale the same way

the word “purchase” does. Fedders responds that this language differential is

immaterial since the parties in Cole contracted for a “purchase” followed by another

potential “purchase” and the parties in this case contracted for a “sale or return,”

“which the UCC plainly explains [to be] a ‘purchase’ and then a ‘sale.’” (Fedders Br.

at 37.) We reject this argument. 
15This is in reference to Best Buy’s claim for carrying costs.

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To begin with, it is rather disingenuous to argue that the parties contracted for

a “sale or return.” While Fedders and the district court deemed the agreement a “sale

or return,” the contract itself does not clearly provide that the IAP is a “sale or return”

provision. This is especially important given the requirements of § 336.2-326(4) and

the fact that we are not entirely convinced that the IAP qualifies as a “sale or return.”

Second, Fedders’ argument assumes a premise that we have denied; namely, the

treatment of a “sale or return” as a purchase and subsequent sale for purposes of

calculating damages. 

We also note that the defendant in Cole agreed to repurchase the heifers at a

different price than that for which they were originally sold. This is more suggestive

of a sale and resale than the conditional right of return at issue in this case. Fedders

claims this is of no moment in this appeal because “Best Buy [similarly] contends that

there is a price attached to keeping goods for a period of time.”15 (Fedders Br. at 37.)

This is not an apt comparison. The parties in Cole contemplated a different resale price

without breach considerations. Best Buy, on the other hand, claims carrying costs only

because Fedders breached. Fedders cannot use alleged damages from its own breach

to liken the transaction at issue to a sale.

In sum, this is an unusual case calling for difficult answers to novel questions.

We appreciate the fact that we are treading in unfamiliar waters, as did the district court

before us. After close analysis of the facts of this case and the sparse law on the

subject, we conclude it is more appropriate to deem Best Buy a buyer than a seller in

this situation. The contract itself envisions only one transaction, with Best Buy as the

buyer with a bargained-for right of return (“take back” contract), rather than two

separate sales in which buyer and seller switch places (“buy back” contract).

Furthermore, no provision of the UCC prohibits return-for-full-credit contracts, and

treating Best Buy as the buyer allows it to retain the benefit of its original bargain. This
16The statute states:

(1) Incidental damages resulting from the seller’s breach include expenses

reasonably incurred in inspection, receipt, transportation and care and

custody of goods rightfully rejected, any commercially reasonable

charges, expenses or commissions in connection with effecting cover and

any other reasonable expense incident to the delay or other breach. 

(2) Consequential damages resulting from the seller’s breach include

(a) any loss resulting from general or particular requirements and needs

of which the seller at the time of contracting had reason to know and

which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of

warranty.

MINN. STAT. § 336.2-715(1)-(2) (1998).

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logic, in addition to the many difficulties inherent in treating Best Buy as a seller,

convinces us of the propriety of our approach.

C. Damages Calculation

The conclusion that Best Buy remains a buyer after exercising its rights under

the IAP is not necessarily the deciding factor in the case. It still must be determined

what, exactly, Best Buy is entitled to recover. Section 336.2-715 presents a

nonexhaustive list of the incidental and consequential damages available to a buyer

under the UCC.16 In particular, the statute requires that any consequential damages

must be foreseeable to be awarded. See Simeone v. First Bank Nat’l Ass’n, 73 F.3d

184, 188 (8th Cir. 1996) (explaining that consequential damages “are only proper if the

seller had reason to foresee the particular requirements of the buyer, and even then only

if such loss could not be prevented”); Karlen v. Butler Mfg. Co., 526 F.2d 1373, 1379
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& n.9 (8th Cir. 1975) (discussing the foundation of the foreseeability requirement for

consequential damages). The question of whether a buyer’s damages were foreseeable

is one of fact. Simeone, 73 F.3d at 188.

As the reviewing court, we are faced with one remaining issue: if the district

court found that Best Buy’s damages were not foreseeable, as required by Minnesota

Statute § 336.2-715(2)(a), and if we do not find that holding to be clearly erroneous,

then there is no reason to remand because Best Buy would still not be entitled to

damages. Thus, we must review the lower court’s opinion and determine what, if

anything, it found regarding foreseeability.

The district court’s discussion of the issue of foreseeability is limited, assumedly

because the court was working from a seller’s damages standpoint where consequential

damages are not an issue. Moreover, the court was of the opinion that no damages

were available to Best Buy as a seller. Thus, the lower court simply stated: “Fedders

introduced evidence that [Best Buy’s markdown damages and carrying costs] were, at

any rate, not foreseeable and therefore not recoverable.” (Ct. Order at 9.) Although

this statement is found in the court’s Findings of Fact, it is unclear whether it is actually

a finding of fact or merely a description of evidence presented to the court. Nowhere

does the order state that the court adopted this evidence in its reasoning. The

conclusions regarding Best Buy’s damages concentrate on the differences between: (1)

the value of the units and their resale price, and (2) Best Buy’s incidental damages (if

any) and the expenses saved in consequence of the breach. The court never cites a

dollar value for the amount saved by Best Buy, but the briefs suggest that it was

anywhere from $55,000 to $71,000. Best Buy’s alleged markdown damages were in

excess of $102,000, and its claimed carrying costs were over $340,000. Because the

lower court found that the amount saved (between $55,000 and $71,000) exceeded any

incidental damages, one can deduce that the lower court did not consider either the

markdown damages or carrying costs to be incidental. Thus, the court probably

considered them consequential and outside Best Buy’s scope of remedies as a seller.
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Nevertheless, nowhere in the order does the court state an opinion on their

foreseeability. 

We read the district court’s opinion as declining to make a holding on the

foreseeability of the sought-after damages. Thus, we have no basis to review the court

on this issue. The actual calculation of damages is a question for the district court, and

we leave that task for remand. See United States on Behalf of Cheyenne River Sioux

Tribe v. South Dakota, 105 F.3d 1552, 1561 (8th Cir. 1997) (remanding the issue of

damages to the district court after the court erroneously held that damages were

barred).

III. Conclusion

For the foregoing reasons, we AFFIRM the district court on the issue of breach

and we REVERSE on the issue of Best Buy’s entitlement to buyer’s remedies and

REMAND for a damages calculation in accordance with this judgment.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.