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Contracts II-Remedies - I Remedies for Breach of Contract...

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I. Remedies for Breach of Contract A. (1) Measuring Expectation 1. (A) Buyer’s Remedies for Breach of Contract a) (1) Cover : An aggrieved buyer who covers will get the cover price plus any incidental and consequential damages (less any expenses saved) b) UCC §2-712 : The buyer may cover by: (1) Making a good faith reasonable purchase, (2) Without any unreasonable delay, (3) Of goods in substitution of those due from the seller. (4) If cover is done in bad faith, then the court uses the market price formula. c) UCC §2-715 : For Buyers Only (1) Incidental Damages : resulting from the seller’s breach include: (a) Expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, and (b) Any commercially reasonable charges, expenses or commissions in connection with effecting cover, and (c) Any other reasonable expense incident to the delay or other breach. (2) Consequential Damages : from the seller’s breach include: (a) Any loss resulting from general or particular requirements and need of which the seller at the time of contracting ‘had reason to know ’ and which could not reasonably be prevented by cover or otherwise; [inability to cover must be foreseeable also] (b) Injury to person or property proximately resulting from any breach of warranty. (3) Cover Damages : Three Options for Damages. (a) If the cover price is less than the K price then no damages. (b) The COURTS ARE SPLIT as for allowing incidental and consequential here. (i) Some courts say no damages at all. (ii) Some courts will allow for any incidental and consequential damages. (a) If the cover price is the same as the K price then only get the incidental and consequential damages. (b) If the cover price is higher than the K price then you get the difference between the two prices and you get incidental and consequential damages. (c) If no cover available, cover requirements are not met, or if it is a bad faith cover, then you just get the Market Price Formula. 1
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(d) Cover must be w/o unreasonable delay [6 years to sue, much much less to cover]. (e) The purchase must be reasonable; the same quality of goods contracted for. B. Market Price Formula : 1. Generally a) You do not cover, or b) You cover in bad faith, or c) Your cover does not follow the requirements of cover. [Laredo dicta allows this for when you don’t cover.] d) This market price formula treats the buyer as if he covered within a reasonable time from the occurrence of the breach. 2. UCC §2-713 : Damages for Non-delivery of Repudiation: a) The difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages [but less expenses saved in consequence of the seller’s breach.] b) Actually, the UCC allows for a reasonable time after breach to determine ‘market price at the time when the buyer learned of the breach.’ c) Market price is to be determined as of the place and time for tender or, in cases of rejection, after arrival or revocation of acceptance.
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