The lower court, through Judge Munson who replaced Judge Cholakis, granted Delchi's motion for partial summary judgment, holding Rotorex liable to Delchi for $1,248.331.81 as consequential damages mainly for the lost of profits. The lower court denied Delchi's claim for damages for incidental and inconsequential damages or out-of-pocket expenses.
On appeal to the United States Court of Appeals (USCA), Rotorex argued that it did not breach the agreement, Delchi is not entitled to payment of lost profits, and the calculation of the number of lost sale is improper. Delchi, on the other hand, filed a cross-appeal to the USCA claiming that it is entitled to payment of the additional expenses it incurred because of the breach.
Article 35 of the CISG, which is the applicable law in this case, provides that "the seller must deliver goods which are of quantity, quality and description required by the contract; the goods do not conform with the contract unless they possess the qualities of goods which the seller has held out to the buyer".
The United States Court of Appeals affirmed the decision of the lower court holding Rotorex liable for breach of contract.