Sales and Leases | 218
manner. Having done so, the seller may recover resale damages. These damages include (1) the difference between the resale price and the contract price, plus (2) any incidental damages as set forth in § 2-710, minus (3) any expenses the seller saved due to the buyer’s breach. If the seller fails to implement the sale in good faith or in a commercially reasonable manner, then the seller is relegated to recovering damages under § 2-708 (damages for nonacceptance or repudiation). [U.C.C. § 2-706, cmt. 2 (1951); Seller’s Incidental Damages, Seller’s Damages for Buyer’s Nonacceptance or Repudiation, infra .] Examples : (1) A retailer ordered a shipment of widgets from a manufacturer. The contract price was $15,000, which the retailer was to pay upon accepting the goods. The manufacturer completed and properly tendered the widgets, and the widgets conformed to the contract. Even so, the retailer wrongfully rejected the widgets, thus breaching the contract. In good faith and in a commercially reasonable manner, the manufacturer resold the widgets for $10,000. In reselling the widgets, the manufacturer incurred $500 in expenses, recoverable as incidental damages. The manufacturer saved no expenses due to the breach, for it finished and delivered the widgets. In the ensuing lawsuit for breach of contract, the manufacturer’s damages are $5,500, consisting of: $15,000 (contract price) - $10,000 (resale price) + $500 (resale expenses) - $0 saved due to the breach. [ See 2Hawkland UCC Series § 2-706:1, Westlaw (database updated June 2021).] (2) A retailer ordered a shipment of widgets from a manufacturer. The contract price was $15,000, which the retailer was to pay upon accepting the goods. The retailer repudiated, and thus breached, the contract after the manufacturer had completed the widgets but before the manufacturer could ship the widgets. As a result, the manufacturer saved $100 in shipping expenses it would have incurred to deliver the widgets to the retailer. In good faith and in a commercially reasonable manner, the manufacturer resold the goods for $10,000. In reselling the goods, the manufacturer incurred $500 in expenses, recoverable as incidental damages. In the ensuing lawsuit for breach of contract, the manufacturer’s damages are $5,400, consisting of: $15,000 (contract price) - $10,000 (resale price) + $500 (resale expenses) - $100 saved due to the breach. [ See 2 Hawkland UCC Series § 2- 706:1, Westlaw (database updated June 2021).] Result if Seller Resells the Goods for More Than the Contract Price The seller is not accountable to the buyer for any profit on the resale. Thus, if the seller resells the goods for more than the contract price, the benefit belongs entirely to the seller. Yet this profit may prevent the seller from recovering damages under the formula discussed above. [U.C.C. § 2-706(6) (1951); 2 Hawkland UCC Series § 2-706:1, Westlaw (database updated June 2021).]
Made with FlippingBook - Online Brochure Maker