Remedies Available to the Buyers
A seller can breach a contract for failure to deliver goods that “conform” the terms of the agreement or fail to properly “tender” goods (e.g. wrong delivery time, giving too much or too little, etc.). To recover, the buyer must have “accepted” the goods. The potential remedies are outlined below.
Cover, § 2-712
Similar to the formula presented in the Restatements, a buyer may recover the difference between the contract price and what they had to expend to obtain the similar supply (substitute goods). The purchase of new goods must be done in good faith and timely. This principle also considers the requirement to mitigate damages.
Market Damages, § 2-713
“The difference between market price at the time the buyer learned of the breach, and the contract price.” If cover damages exceed the value that would be obtained by the market price, only cover damages may be recovered.
Damages for Accepted Goods, § 2-714
If the buyer accepts defective goods that do not meet the value of the contract terms, the buyer can retain the goods and collect damages up to the contract price. However, the buyer needs to inform the seller of this position to preserve the right to collect.
Specific Performance, § 2-716
Specific performance is rarely granted. To obtain specific performance, the buyer would have to show that the goods bargained for are truly unique. For example, a contract for the sale of an extremely valuable painting may require specific performance.
Incidental and Consequential Damages, § 2-715
“Consequential damages include:
- 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
- injury to person or property proximately resulting from any breach of warranty.
Remedies Available to the Sellers
The remedies available to sellers depends on whether the buyer has accepted the goods or not. If the goods are not accepted, the seller’s options include resale, market, or lost profit. On the other hand, if the goods are accepted (or can’t be resold), the seller may recover the market price of the goods.
Resale Damages, § 2-706
Resale occurs when the buyer breaches, and the seller redistributes (sells) the goods to other buyers. If the resale value is less than the contract price, then the seller may recover the remaining balance. To apply this method of recovery, three steps must be met.
- The goods resold are the same as those under the original contract.
- Notice of resale (within a reasonable time) must be provided.
- The sale must be made in good faith along commercially reasonable standards.
Market Damages, § 2-708(1)
Similar formula to buyers. Contract price – Market value = Market damages.
Lost Profits, § 2-708(2)
Lost profits is an alternative to market damages. However, lost profits are typically only recoverable if market damages are inadequate. There are types of situations where a seller can recover lost damages:
- Lost volume sellers
- Assembly is only partially completed when the buyer breaches
- “Jobbers” (the middle man) may recover if a breach occurs before they have obtained the goods to resale
Seller’s Action for the Price, § 2-709
The seller may recover the price of the goods if: 1) the seller accepts the goods; 2) the seller has the risk of loss after the goods are damaged; and 3) seller is unable to resell and thus forces the goods onto the buyer.
Seller’s Incidental and Consequential Damages, § 2-710
Incidental damages often include transportation or storage costs the occur because of the breach.
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.