Lecture 11 Flashcards
Courts will not award consequential damages for breach unless the damages fall into one of two classes
- Arise naturally- damages were foreseeable by any reasonable person regardless of whether D actually foresaw them
- Remote or unusual consequences but only if D had notice
Unrecoverable damages
Seller who isn’t paid promptly: profits that the seller could have made in some other transaction
Damages from emotional distress or for medical cost
Damages measured by the value of the work done when this exceeds the contract price
Unrecoverable damages
Sellers who have to pay liquidated damages to third parties
The rule of Hadley may always be modified by express agreement. The parties can simply agree that even unforeseen damages shall be compensable
Duty to mitigate
Reasonable efforts - P does not have to incur substantial expense or inconvenience,damage his reputation or break any other contracts in order to mitigate
Duty to mitigate only applies to consequential damages
This means that failure to mitigate deprives the P only of Consequential damages not other categories of damages such as contract / market differential
UCC- buyers duty to mitigate
If seller fails to deliver or delivers defective goods: buyer must cover
If buyer doesn’t cover when he could have done so he will still be entitled to the difference between the market price at the time of breach and the contract price but he’ll lose the ability to collect consequential
Substitute position for unjustly fired employee and whether the refusal to accept with constitute failure to mitigate
The type of work in the new position must not be materially harder, less attractive or prestigious or even substantially different
The location and work hours must not be unreasonably different
The burden if proof is on the D to show that the two factors are satisfied
If aggrieved party tried to mitigate and incurred loss or expenses,he may recover damages for those. As long as P acted reasonably to mitigate it doesn’t matter whether his attempt was successful
Buyer’s rights if the seller fails to deliver or delivers defective goods which the buyer rightfully rejects
Cover- but goods from another seller and recovery the difference between the contract price and the cover price
Buyer’s purchase must be reasonable and in good faith without unreasonable delay
What happens when the buyer doesn’t cover
Can recover the contract/ market differential ie difference between the contract price and the market price at the time when buyer learned of the breach
Define Consequential damages
UCC- 2-715. To include only those losses which could not reasonably be prevented by cover or otherwise
The buyer regardless of whether he covers may recover for incidental and consequential damages
Seller’s damages for breach
Contract/ resale differential
Contract/market differential
Salvage value and costs incurred
2-708 also takes into account the seller’s cost incurred in performing and any proceeds the seller gets from selling the goods at a loss to a third party
2-708 (2)
Profits that the seller would have made from full performance+ cost reasonably incurred less the proceeds of resale
If the buyer has accepted the goods the seller may sue for the entire contract price even if buyer may have a counterclaim for damages for non conformity
Eg buyer orders 10!widgets at $50 each from seller. Seller ships the goods late but buyer keeps the goods for 30 days without saying anything. Buyer will be held to have accepted the goods and seller can therefore sue for the $500. But buyer may counterclaim for the damages he has actually suffered due to late delivery
If the risk of loss has passed to the buyer and the goods are lost in transit,the seller may sue for the entire contract price
If the seller has already earmarked particular goods as being ones to be supplied under the contract and the buyer rejects them or repudiates before delivery, seller may recover the entire contract price if he is unable to resell them on some reasonable basis. Most commonly applies to perishable goods and custom made goods
Sellers may NOT recover consequential damages
Buyer’s claim
If the buyer has accepted the goods and they turn out to be defective buyer’s remedy is to sue for breach of contract
Buyer can sue for breach of warranty. Also recover non warranty damages. Eg damages resulting from sellers delay or breach of express promise to repair defective goods
