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substitute widgets for $20,000. The buyer incurred $500 in costs to locate the replacement widgets; these costs qualified as incidental damages. The buyer saved no expenses due to the breach. The buyer’s total recovery here is $10,500. Of this, $5,500 consists of cover damages, calculated as follows: $20,000 (cost of cover) - $15,000 (contract price) + $500 (cost to find substitute widgets). The remaining $5,000 recovery reflects the buyer’s prepayment toward the purchase price. [ See 2 Hawkland UCC Series § 2-712:1, Westlaw (database updated June 2021).] Compare : A buyer contracted to purchase widgets from a seller for $15,000. Before the widgets were finished, the seller repudiated the contract. The buyer commercially reasonably obtained substitute widgets for $12,000. The buyer incurred $500 in costs to locate the replacement widgets; these costs qualified as incidental damages. However, because the seller never produced the widgets, the buyer saved the $100 in expenses it would have incurred to load the widgets onto its truck and bring them back to its warehouse. Here, the buyer’s cover damages total $0. The buyer saved $3,000 versus the contract price in acquiring the replacement widgets. Even accounting for the $100 in saved expenses and $500 in expenses of locating replacement widgets, the buyer is better off by $2,600 than under the original contract. Thus, the buyer has no recoverable damages. [ See 2Hawkland UCC Series § 2-712:1, Westlaw (database updated June 2021).] 3. Buyer’s Security Interest in the Goods If the buyer rightfully rejects the goods or rightfully revokes acceptance, Article 2 affords the buyer a security interest in goods that are within the buyer’s possession or control. The security interest covers (1) any payments toward the price and (2) any expenses the buyer reasonably incurs in the goods’ receipt, inspection, care, custody, or transportation. Here, the buyer may hold the goods and resell them in the same way as a seller could do upon the buyer’s breach. [U.C.C. § 2-711(3) (1951); Resale by Seller, supra .] a. Scope of Buyer’s Security Interest in the Goods The buyer’s security interest in the goods does not cover all conceivable damages the seller may owe the buyer. Rather, as discussed, the buyer’s security interest is limited to (1) any price the buyer paid, plus (2) expenses the buyer reasonably incurred for the goods’ receipt, care, custody, transportation, or inspection. If the buyer resells the goods, and the resale yields proceeds exceeding these amounts, then the buyer must account to the seller for the excess. Unlike an aggrieved seller, the buyer cannot necessarily keep any profits on the resale. Any resale proceeds will, of course, count against the overall damages that the seller owes the buyer. The buyer’s enforcing its security interest and selling the goods for the seller’s account does not preclude the buyer from exercising its other remedies, such
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