I) Buyer’s General Damages for Total Breach

 Traditional measure of general damages for total breach of K by the seller is the difference
between the market price of the goods and the K price.
a) The relevant price is that which is in effect at the time the buyer learned of the breach.
 UCC addition: The buyer may choose to cover; make a good faith purchase or K to purchase
substitute goods without unreasonable delay.
a) The buyer may then recover the difference between the cost of cover and the K price.
b) The buyer’s failure to cover will bar recovery of consequential damages.
 Breach until after performance is due- where defective goods are shipped and defects are
discovered later.
a) Damages are measured as of the time the buyer could have covered.
 UCC accelerates the date on which damages are assessed in cases where there is a breach by
anticipatory repudiation.
a) Conflict between the two provisions:
(1) 2-713 “The measure of damages for non-delivery or repudiation by the seller is the
difference between the market price at the time when the buyer learned of the
beach and K price.” Between K price and market price as of the time the buyer
would reasonably cover. Build in avoidable consequences. If the buyer does not
cover, damages cannot be enhanced by the buyer’s remaining idle until the time for
delivery under the K.
(2) 2-610 Permits the aggrieved party after the repudiation to await performance “for a
commercially reasonable time.”

II) Buyers Damages for Breach of Warranty or Fraud

 Breach of Warranty
a) Measure is the difference between the value of the goods accepted and the value they
would have had if they had been as warranted
b) Value is determined at the time and place of acceptance.
c) Legal fiction- objective “market” standard of value.
d) UCC 2-714(2) which permits recovery where “special circumstances show proximate
damages in a different amount.”
 e) UCC 2-715 specifically takes into account the buyer’s special needs in allowing for
consequential damages, provided that the seller has reason to know of those needs- a
complex subjective-objective test.
 Fraud and Misrep. Damages
a) UCC 2-721- same as for breach of K

III) Buyer’s Consequential & Incidental Damages for Seller’s Breach

 Lost profits and other proximate damages are recoverable only if these were foreseeable to
the seller.
a) UCC 2-715(2) consequential damages include: “any loss resulting from general or
particular requirements and needs of which the seller at the time of King had reason to
know and which could not reasonably be prevented by cover or otherwise.
b) Example of special circumstances a seller may not be liable for: If a suv-vendee will
cancel its account with the buyer. The seller will neither be liable for damages caused by
the cancellation nor for general loss of good will.
 Lost profits occurring from the market shortage when the seller has reason to know the
buyer cannot obtain substitute goods when the goods are brand name goods and seller
controls the supply of goods bearing the bran or when the goods are made pursuant to a
patent exclusively controlled by one of the parties.
a) Where seller delivers goods to a manufacturer knowing they are to be used in the
manufacturing process, the seller has reason to know that defective goods may cause a
disruption of production and a consequent loss of profits.
 UCC permits the parties to limit or exclude consequential damages by agreement, unless the
limitation or exclusion is unconscionable.
 Incidental damages- expenses reasonably incurred in inspection, receipt, transportation,
and care and custody of goods rightfully rejected.
a) Any commercially reasonably charges, expenses or commissions in connection with
effecting cover.
b) Any other reasonable expenses incident to the delay or breach are recoverable as
damages.
IV) Seller’s General Damages
 Seller’s general damages for non-acceptance or repudiation by the buyer is the difference
between the market price and the unpaid K price.
a) UCC provides that if the difference between the K price and the market price provides
inadequate recovery, “the measure of the damages is the profit (including reasonable
overhead) which the seller would have made from full performance by the buyer.”

V) Seller’s General Damages following Resale

 In the event of a breach that leaves the goods in the seller’s possession or control, the seller
may identify the goods to the K and resell them at a private or public sale.
a) Seller may then recover from the buyer the difference between the resale price and K
price, provided the sale is conducted in a commercial reasonable manner and prior
notice of the intended resale is given to the buyer.

VI) Seller’s Consequential & Incidental Damages

 Consequential damages are not available to the seller. 1-106.
 Only exception to common law view- where payment is to be made to a third person, the
creditor has been allowed to recover special damages suffered, often containing of injury to
credit and reputation.
 UCC does expressly permit recovery for incidental damages suffered.
a) “Include any commercially reasonable charges, expenses or commissions incurred in
stopping delivery, in the transportation, care and custody of goods after buyer’s breach,
in connection with return, or resale of the goods or otherwise resulting from the
breach.”
b) 2-706 and 2-708???????

VII) Seller’s Action for the Price

 It is not an action for the damages.
 Such an action is available if the goods to the K have been accepted by the buyer. UCC 2-709
(1)(a)
 It is also available if the seller identifies the goods to the K and is unable after reasonable
effort to resell them at a reasonable price, of if the circumstances reasonably indicate that
such efforts will be unsuccessful. UCC 2-709 (1)(b).
  In this event, the seller MUST hold the goods for the buyer, but if resale subsequently
becomes practicable the seller MAY resell them at any time prior to collection of a judgment
for the price. UCC 2-709 (2).
 The seller also has an action for the price if the goods are lost or damages within a
commercially reasonable time after risk of their loss has passed to the buyer.

VIII) Contracts to Manufacture Special Goods

 If manufacture is completed the seller may maintain an action for the price if the goods are
not reasonably resalable and if resalable, the seller may utilize the resale remedy or
maintain an action for damages.
 Two options when the repudiation occurs prior to completion of manufacture:
(1) To complete manufacture, appropriate the goods to the K and then exercise the
remedy of resale or of an action for the price.
(2) Cease manufacture and resell for scrap or salvage value or proceeds in any other
reasonable manner.
 UCC provides no remedy.
 Seller may sure for damages measured by the difference between M and K plus incidental
damages, or for profit that would have been made. And lost “reasonably incurred”

Consequential & incidental Damages

Consequential- 2-715 include the profits which the buyer could have made by reselling the
contracted-for goods had they been delivered.

Incidental Damages- 2-715 to include expenses reasonably incurred in inspection, receipt, and
transportation and care and custody of goods rightfully rejected, any commercial reasonable
charges, expenses or commissions in connection with effecting cover and any other reasonable
expenses incident to the delay or other breach