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differing types of damages can be difficult. [2 Hawkland UCC Series § 2-714:2, Westlaw (database updated June 2021).]
Example : A general contractor purchased steel casings from a manufacturer for use in constructing nuclear power plants. The contract specified that the manufacturer would bear the expense of investigating any apparent defects. Soon after the contractor accepted the casings, they manifested various defects. The contractor did not revoke acceptance. Rather, it incurred substantial expense to conduct a root-cause analysis to identify the cause of the defects and remedy them. On similar facts, a federal district court held that these expenses constituted direct damages. Even without knowledge of special circumstances peculiar to the contractor, the manufacturer could reasonably be expected to know that, were the casings defective, the contractor would have to incur expenses to investigate the cause should the manufacturer refuse to do so. [ Adapted from Rexnord Industries, LLC v. Bigge Power Constructors , 947 F.Supp.2d 951 (E.D. Wisc. 2013).] 2. Direct Damages for Breach of Warranty Section 2-714 furnishes a nonexclusive measure of damages in breach-of-warranty cases in which the buyer has accepted the goods, has not revoked acceptance, and has provided the required notice. That measure is the difference, at the time and place of acceptance, between (1) the value of the goods as accepted and (2) what the goods’ value would have been, had they been as warranted. The contract price is often strong, though not conclusive, evidence of the goods’ value as warranted. Conversely, a resale price can be evidence of the goods’ value as accepted. If the goods have a defect that would justify revoking acceptance, damages are determined as of the time the buyer decides not to revoke. This measure of damages does not apply, however, if special circumstances demonstrate proximate damages in a different amount. As always, if appropriate, the buyer may also recover incidental and consequential damages. [U.C.C. § 2-714(2), cmt. 3 (1951); Mayberry v. Volkswagen of Am., Inc. , 692 N.W.2d 226 (Wisc. 2005); 2 Hawkland UCC Series § 2-714:2, Westlaw (database updated June 2021).] a. Special Circumstances Indicating Proximate Damages of a Different Amount In breach-of-warranty cases, special circumstances may indicate proximate damages in an amount other than the value differential. For instance, here again, the cost to repair or replace the goods may supply the measure of damages. Further, if the buyer has used the goods, that use value may be deducted from recoverable damages. [2 Hawkland UCC Series § 2-714:2, Westlaw (database updated June 2021).]
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