Question

S and B contracted to purchase S's car for $1,500. On the date for delivery B disappears. 1) Why do buyer's breach contracts for the sale of goods by refusing delivery? 2) If it was determined that the fair value of the car was $1,200 and it would cost S an additional $200 to continue insuring and storing the car, what would be the correct measure of compensatory damage under UCC Article 2? 3) What if S, upon learning of B's breach, instead sold the car to C for $1,000. How would that change your answer (if at all)? 4) Let's say S is a new car dealer. B contracted to buy a new honda civic for $15,000. B refuse delivery. The car's fair market value is $15,000 and S eventually sells the car to C for $15,000. Has S suffered any damage due to B's breach? Why or why not?

Answer 1

1. Breach of contract on sales of goods can occur when the sales involves legal binding between the seller and the buyer. Breach of contract occurs when either the buyer or the seller doesn't honor the terms of agreement. Hence, when the buyer is refusing the delivery he is breaching the contract by not agreeing to the sale after entering into a legal contract.

2.The correct measure of compensatory damage will be that S can compensate that cost from the next buyer.

3. If S upon learing of B's breach, sells the car to C, the answer wont change since S is not involved in breaching of contract. He is selling his car to C after knowing about B's breach. But he will be facing a loss of $500 if he sells his car to C.

4. S has not suffered any damage due to B's breach since he is selling his honda at the same price he would have sold to B.