Question
X. Smart Chips, Inc. is a large semiconductor manufacturer that entered into a contract with Dandy Build All Contractors, Inc. to have Dandy build a
X. Smart Chips, Inc. is a large semiconductor manufacturer that entered into a contract with Dandy Build All Contractors, Inc. to have Dandy build a clean room and provide production equipment for the clean room. The agreement called for $9 million in total to be paid by Smart Chips to Dandy, in installments as progress milestones were achieved. Dandy misjudged how much would be required to perform the contract, and about halfway through the project, when Smart Chips had already paid $5 million to Dandy under the contract, Dandy stopped work and refused to proceed further unless Smart Chip agreed to increase the total payments by $2 million. Smart Chips refused to increase the payments, notified Dandy that Smart Chips was terminating the contract because of Dandy's alleged breach, and entered into a contract with Excellent Contractors to finish the project for total payments to Excellent of $6 million. Excellent finished the project and was paid in full, but the delays resulted in Smart Chips being unable to fulfill $500,000 in orders that it would have been able to fulfill with production from the new clean room. Smart Chips would have had a profit of $75,000 on the cancelled orders. Does the 'economic loss rule' apply to the situation above? If so, what would be the likely amount of damages awarded to Smart Chips, Inc?
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