SALE OF GOODS CONTRACTS - SELLER’S REMEDIES

SALE OF GOODS CONTRACTS - SELLER’S REMEDIES

1. SECTION 2-703: SELLER’S REMEDIES IN GENERAL

1. WITHHOLD DELIVERY

   1. STOP DELIVERY

   2. PROCEED UNDER 2-704 FOR GOODS UNIDENTIFIED TO THE CONTRACT

   3. RESELL AND RECOVER DAMAGES FOR NON-ACCEPTANCE (§ 2-706)

   4. RECOVER DAMAGES FOR NON-ACCEPTANCE (§ 2-708)

   5. RECOVER THE PRICE (§ 2-709)

   6. CANCEL

   7. Incidental Damages: (§ 2-710)

1. SELLER’S RESALE: 2-706

1. RESALE MUST BE MADE IN GOOD FAITH AND IN A COMMERCIALLY REASONABLE MANNER

   1. MEASURE = (CONTRACT PRICE – RESALE PRICE) + INCIDENTAL DAMAGES + CONSEQUENTIAL DAMAGES – EXPENSES SAVED.

   2. SELLER MAY RESELL AT PRIVATE OR PUBLIC SALE

1. MUST BE SOLD AT THE USUAL PLACE OR MARKET IF ONE REASONABLY AVAILABLE

   1. ONLY IDENTIFIED GOODS MAY BE SOLD

   2. GOODS MUST BE WITHIN THE VIEW OF THOSE AT THE SALE

   3. THE SELLER MAY BUY THE GOODS (SETTING HIS DAMAGES)

4. THE RESALE MUST BE REASONABLY IDENTIFIED AS REFERRING TO THE BROKEN CONTRACT.

5. SELLER MUST GIVE BUYER REASONABLE NOTICE OF A PRIVATE SALE

6. SPRAGUE V. SUMITOMO FORESTRY CO.: Sprague wants to use the 2-706 measure for K/resale diff. Sprague failed to notify Sumitomo of the sale of the logs. Tries to say (1) Sumitomo should have known that he was reselling the logs, but fact that Sprague sold the logs to five different buyers weakens its argument. (2) Filing the lawsuit served as notice. Court won’t buy this because the complaint doesn’t mention resell and only asks for damages. (3) Sumitomo had to plead lack of notice as an affirmative defense. Court rejects this argument. Court holds that Sprague failed to notify. Instead, court applies 2-708 (and UCC 2-723) for K/market differential. Prof discusses how sellers tend to try to classify everything as incidental damages (2-710) because no jd’s have adopted the UCC view that awards them consequential damages. General damages = on the K. Special = on another K.

1. SECTION 2-708

1. MEASURE = CONTRACT PRICE – MARKET PRICE AT THE TIME AND PLACE FOR TENDER + INCIDENTAL + CONSEQUENTIAL DAMAGES

1. IF ABOVE INADEQUATE, USE MEASURE BELOW.

   1. Common instances:

1. LOST VOLUME SELLER (access to unlimited supply - Neri)

   1. The item has no market price

   2. Seller doesn’t have the items (Collins)

   3. “due credit for payments.” B gets credit for S’s resale sometimes, depending on the facts. Only works when the item being sold is being sold for scrap or is already damaged. (ex. Grass catcher case, note 6 p. 427, also problem on Clara Net…something “cutter”?)

1. MEASURE = PROFIT (INCLUDING OVERHEAD) + INCIDENTAL DAMAGES WITH ALLOWANCES FOR COSTS AND DUE CREDIT FOR PAYMENTS

2. COLLINS ENTERTAINMENT V. COATS: Collins argues that he would have been able to lease the machines to other people and the lost volume seller doctrine should be used. D argues against lost volume seller principles because: (1) Allows seller to avoid damage mitigation. (2) Insufficient evidence to support LVS. First, analyze why § 2-708(1) measure is insufficient. Lost volume seller elements given as:

1. The person who bought the resold entity (purchaser) would have been solicited by the P had there been no breach or resale.

   1. The solicitation would have been successful

   2. The P could have performed the additional K.

   3. Certainty: this is usually not too hard to show because you know what the costs are.

4. KENCO HOMES V. WILLIAMS: Kenco sells mobile homes. The Williams contracted to purchase a mobile home and satisfied their financing contingency and site approval. Gave Kenco a $600 deposit, but then changed mind and cancelled the check. Seller doesn’t have the mobile home because they haven’t ordered it from the factory. Thus, they cannot resell it. Plus, even if they did resale, they are still losing a sale because Kenco could have sold both units.

1. ACTION FOR THE PRICE § 2-709: WHEN THE BUYER FAILS TO PAY, THE SELLER MAY RECOVER THE PRICE:

1. OF GOODS ACCEPTED

   1. OF GOODS LOST OR DAMAGED AFTER THE RISK OF LOSS PASSED TO THE BUYER;

   2. OF GOODS IDENTIFIED TO THE CONTRACT IF SELLER IS UNABLE TO RESELL THEM AT A REASONABLE PRICE

   3. DANIELS V. YAZOO MFG: Lawn mower grass catchers. There would have been less damages if the parties had communicated better. Seems strange that seller gets paid for a faulty design, but it is the buyer’s fault because they kept accepting units when they were faulty and failed to properly notify seller.

1. SELLER’S INCIDENTAL DAMAGES § 2-710

1. COMMERCIALLY REASONABLE EXPENSES

   1. CARE AND CUSTODY

   2. IN CONNECTION WITH THE RETURN OR RESALE

6. CASES

4. NATIONAL CONTROLS V. COMMODORE BUSINESS MACHINES

5. NEUMILLER FARMS V. CORNETT

6. PROBLEM: THE COINS

6. 
   
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