Buyer's Remedies
(1) I have a contract with you to sell you 1000 tubes of hair gel at $2 a tube. I don't deliver. You buy
replacement tubes at $3 a tube (the best deal you can get).
2-712: CP - KP = $3000 - $2000 = $1000.
(2) Same as (1) except you cover at $6 when the market price is $3.
2-712: CP - KP = $6000 - $2000 = $4000
2-713: MP - KP = $3000 - $2000 = $1000
Which do you get?
(3) The same as (1), except you do not cover; the market price of hair gel tubes is $3 a tube.
2-713: MP - KP = $3000 - $2000 = $1000
(4) I have a contract with you to sell you 1000 tubes of hair gel at $2 a tube. You have a contract to resell
700 tubes at $2.50 a tube. You plan to sell the remaining 300 at whatever the market price is at the time of
delivery. I deliver only 500 tubes. You cover by buying 200 tubes at $3, the market price at the time of
delivery.
2-712: CP - KP = $600 - $400 = $200
2-713: MP - KP = $900 - $600 = $300
(5) Same as (3) except you buy 200 tubes at $1 a tube as the market has taken a severe plunge.
2-712: CP - KP = $200 - $400 = -$200 = $0
2-713: MP - KP = $300 - $600 = -$300 = $0
(6) Same as (4) except the market price when I deliver is $3 a tube. A few days later, the price drops to $1
a tube and you cover, buying 200 tubes at $1 a tube. You could have sold the extra 300 tubes for $3 a tube
before the market fell.
2-712: CP - KP = $200 - $400 = $0
2-713, the 200 tubes: MP - KP = $600 - $400 = $200 [MP at the time the buyer learned of the breach].
Can you get these damages even though you covered?
2-713, the 300 tubes: MP - KP = $900 - 600 = $300.
A buyer has a contract with a seller to buy 100 hula hoops at $20.00 a hoop. That same buyer has a
contract to resell the hoops at $30.00 a hoop. Before the seller delivers, the market price rises to $60.00 a
hoop, and the seller refuses to deliver. The buyer/reseller does not cover; instead, he talks his customers
out of enforcing their contracts and gives their money back to them. What are the buyer/reseller=s
damages?
MP - KP = $6000 - $2000 = $4000
CP - KP = 3000 - 2000 = 1000
Seller Remedies
(1) I have a contract with you to sell you my personal supply of 1000 tubes of hair gel at $2 a tube (having
moved from the Sunset Strip in LA to Chicago, I don't need so much hair gel). You refuse delivery, and I
resell at $1 a tube (this being the best deal I can get).
2-706: KP - RP = $2000 - $1000 = $1000.
(2) Same as (1) except I resell at $3 a tube.
2-706: KP - RP = $2000 - $3000 = -$1000 = $0.
(3) Same as (1) except I don't resell; and: (a) the market price is $1 a tube; (b) the market price is $3 a tube.
(a): 2-708(1): KP - MP = $2000 - $1000 = $1000.
(b): 2-708(1): KP - MP = $2000 - $3000 = --$1000 = $0.
(4) Same as (1) except that I am a wholesaler of hair gel and can get as much hair gel as I want (so I am a
"lost volume seller"). My profit on our deal would have been $500 = KP of $2000 - my costs of $1500.
2-708(2): lost profits = $500 = KP - cost of completion =
$2000 - $1500
(5): Same as (1)--except: I am a manufacturer of hair gel, and I have not yet begun to manufacture the hair
gel you ordered. (a) I go ahead and manufacture it and sell it at $1 a tube. It costs me $1500 to
manufacture the hair gel. (b) I don't manufacture it; (c) I don't manufacture the hair gel and I sell the
material I was going to use for salvage value of $100.
(a): Which one do you get?
2-706: KP - RP = $2000 - $1000 = $1000; or,
2-704, 2-708(2): lost profits = KP - cost of completion = $2000 - $1500 = $500.
(b): 2-704, 2-708(2): lost profits = $500.
(c): 2-704, 2-708(2): lost profits = KP - (cost of completion + salvage) = $2000 - ($1500 + $100) = $400