                      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.
                                   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.




                                          -2-
        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 mid-
July 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


         1
        We 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.
         2
             This is the cost value of the remaining core models, not the estimated retail
value.

                                              -3-
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


      3
          Best 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
      4
        Fedders’ 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.

                                          -4-
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 cross-
appeals 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.




                                           -5-
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


      5
        Fedders 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

                                           -6-
        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



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.)

                                            -7-
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.



      6
          The 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).
      7
        This 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.”

                                          -8-
        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.




      8
       We 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.

                                           -9-
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.




      9
          Minn. 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).

                                            -10-
        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


       10
        Minn. 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).

                                           -11-
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

       11
         This 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).
       12
            Minn. 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).

                                            -12-
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.

      13
        Anderson 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).

                                          -13-
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


      14
         We 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.”


                                          -14-
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.




                                         -15-
       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

       15
            This is in reference to Best Buy’s claim for carrying costs.

                                             -16-
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


      16
           The 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).

                                          -17-
& 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.

                                            -18-
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.




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