Chapter 22 – Remedies for Breach of Sales Contracts
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CHAPTER 22
REMEDIES FOR BREACH OF SALES CONTRACTS
I. OBJECTIVES:
This chapter is intended to acquaint the student with the remedies available to an injured party,
the Code rules that govern buyer-seller agreements as to remedies, and the Code’s statute of
limitations. After reading the chapter and attending class, the student should be able to:
the sale of goods.
4. List and describe the remedies that the Code makes available to an injured seller.
5. List and describe the remedies that the Code makes available to an aggrieved buyer.
6. Explain what is meant by the term cover in the context of a contract for the sale of goods.
8. Discuss when an aggrieved buyer has a right to specific performance of a contract for the sale
of goods.
II. ANSWER TO INTRODUCTORY PROBLEM
A. The first question following the hypothetical situation that appears at the beginning
of the chapter asks what options are open to a seller that is in the process of
minimize the loss.
B. The second question asks for the options open to an aggrieved seller if the buyer
refuses to accept the item that was the subject of the contract between them. The
was not completed.
C. The third questions asks for the options open to an aggrieved buyer when the seller
between the contract price and the current market price of the item.
Chapter 22 – Remedies for Breach of Sales Contracts
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D. The fourth question asks whether the buyer has any options if a seller proposes to sell
specially manufactured for her.
E. The fifth question raises the question as to whether, having made a promise and a
III. SUGGESTIONS FOR LECTURE PREPARATION:
A. Introduction
1. Remedies Generally. Note the purpose of the Code remedy provisions: to place the
recoverable by the harmed party.
2. Agreements Concerning Remedies. State the restrictions on the parties’ ability to set,
limit or eliminate the amount of damages. Essentially the law will not interfere with the
Star-Shadow Productions, Inc. v. Super 8 Sync Sound System (page 623). Where price
sheets and the boxes containing film contained a limitation of liability clause limiting the
bargained for.
Points for discussion: What could the buyer have done to better protect itself in this case
against the problems it experienced?
Additional Examples: Problem Cases #1 and 2..
3. Note the statute of limitations is 4 years and explain when it begins to run. Discuss how
Example: Problem Case #3.
B. Seller’s Remedies.
1. List on the chalkboard the remedies available to a seller when the buyer breaches or is
second titled “Procedure” a third titled “Damages Recovered,” and the last titled “Events
2. Cancellation and Withholding of Delivery. Note that when the buyer breaches the
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the seller’s special duty to mitigate his damages when the buyer breaches the contract
while the seller is in the process of manufacturing the goods.
Example: Problem Cases #4.
3. Resale. Note that where the seller sets aside goods intended for the contract or completes
This is a good time to illustrate various kinds of damages that might fall into the
“incidental” category.
5. Damages for Rejection on Repudiation. Discuss the two measures that are used to
compute these damages—(1) the difference between the contract price and the market
the capacity to produce the goods called for by the contract as well as any other similar
goods that another buyer might seek to obtain, the aggrieved seller is entitled to recover
other damages.
Points for Discussion. Ask the students why the measure of damages suggested by the
Jewish Federation, namely incidental damages, would not be sufficient to put Cedar
repudiated.
Examples: Problem Cases # 5 and 6.
6. Right to Reclaim. Give special treatment to the rights of the reclaiming seller, relating
his deceit of the seller.
7. Discuss the Code Rule on Liquidated Damages.
8. The Global Business Environment: Seller’s Remedies in International Transactions (page
C. Buyer’s Remedies
1. List on the chalkboard the buyer’s remedies when the seller breaches or is about to breach
the contract. Refer to the materials on anticipatory breach in Chapter 21. You may wish
titled “Events Invoking the Remedy.”
Beer v. Bennett (page 630). Where a buyer justifiably revoked his acceptance of a used
automobile that had been disassembled by the seller and ultimately found to not have all
and payment of the same.
Chapter 22 – Remedies for Breach of Sales Contracts
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Cyberlaw in Action: E-Commerce Aids Buyers (page 630). Point out to students how e-
commerce can facilitate the giving of notice by a buyer or seller.
2. Right to Cover. Indicate the buyer has the right, on the seller’s default, to purchase
the cost of cover.
seller’s breach.
4. Damages for Non-Delivery. Note that a measure of damages available to the buyer is the
difference between the contract price and the market price plus incidental damages.
Green Wood Industrial Company v. Forceman International Development Group, Inc.
(page 632). Where the seller failed to deliver goods and the buyer did not cover, the
would satisfy the obligation.
Points for Discussion: What concerns did the court have about allowing the third party’s
How significant is/should be the fact that the third-party claim would arise and be
resolved under Chinese law?
to recover the difference between the boom as warranted and the value of the goods
received at the time and place of acceptance (which was zero).
Example: Problem Case #7.
Ethics in Action: Should the Buyer get an Honest Answer? (page 606): This question
facts known to him and which he has reason to believe a reasonable buyer would want to
know.
Example: Problem Case #8.
7. Specific performance. Note the circumstances when a buyer can obtain specific
Example: Problem Case #9.
8. Buyer and Seller Agreements as to Remedies. Review the rules concerning agreements
between buyers and sellers as to remedies.
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9. The Global Business Environment: Buyer’s Remedies in International Transactions (page
607): Discuss the similarities and the differences between the remedies available to an
aggrieved buyer under the UCC and the remedies available under the CISG.
IV. RECOMMENDED REFERENCES:
See the references listed in Chapter 19, Formation of Sales Contracts.
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
or actual harm. The court noted the evidence that had been produced to show the
Syndicate, Inc., 812 S.W.2d 53 (Ct. App. Tex. 1991).
2. Yes. The court stated that under Section 2-719 of the UCC, consequential damages may
risk she could cover by insurance. Accordingly, the court found that the limitation of
liability was not unconscionable—and enforced it against Lobianco. Lobianco v. Property
Protection, Inc., 437 A.2d 417 (Super. Ct. Pa. 1981).
3. No. the court held that the warranty promising to replace free of charge any part of a gas
N.Y. 2010)
4. No. The court held that Murrey’s action in dismantling the tables and using the materials
Madsen v. Murrey & Sons Co., Inc., 743 P.2d 1212 (Sup. Ct. Utah 1987).
486 (Orphan’s Ct. Penn. 1968).
6. Yes. Cohn was awarded $1,679.50 as damages. The resale was made in good faith
difference between the contract price and the resale price together with incidental
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7. The court awarded Barr the difference between the market value the yacht would have had if
it had been as warranted and represented (which it found to be $97,000) and its market value
plus “incidental and consequential damages.” The attorney’s fees were a direct and natural
consequence of the breach of the warranty and could not have been prevented by “cover.” De
La Hoya v. Slim’s Gun Shop, 146 Cal Rptr. 68 (Super Ct. Cal. 1978).
9. Yes. The court held that Schweber could get specific performance if he could show a breach
UCC Rep. 1154 (Sup. Ct. N.Y. 1973).