Monday, January 25, 2010
4 - Contract Remedies - Damages (UCC)
CONTRACT REMEDIES – Damages (UCC)
PLEASE NOTE THAT THE FOLLOWING IS TAKEN FROM SOME OF MY CLASS NOTES, SOME OF WHICH IS MY OWN PERSONAL WORK AND SOME OF WHICH BELONGS TO CONCORD LAW SCHOOL. IT IS POSTED TO HELP MY IL STUDENTS IN PARTICULAR. IT CANNOT BE DISSEMINATED WITHOUT EXPRESS, WRITTEN PERMISSION.
As with common law, the overall goal of Article 2 remedies is to put the injured party in as good a position as if the other party had fully performed (the expectancy) § 1-106(1). Also, as with the common law, punitive damages are not available. It is also proper to read other common law principles such as mitigation into the Code § 1-103.
I. SELLER'S REMEDIES (2-702 – 710)
In the UCC, if a buyer breaches by failing to pay, the general measure of damages, as with the common law, is the difference between the contract price and the market.
A. 2-702 covers buyer’s insolvency. The seller may refuse to deliver, except for cash or stop delivery or reclaim property if the buyer received goods on credit while insolvent, upon demand made within a reasonable time after the buyer's receipt of the goods.
B. Seller's Remedies in General 2-703
1. If buyer is in breach, seller may:
i. withhold delivery of the goods
ii. stop delivery of the goods under 2-705
iii. proceed under 2-704 for unidentified or unfinished goods
iv. resell and recover damages under 2-706
v. recover damages for non-acceptance or repudiation under 2-708 & 2-709
2. Seller's Incidental Damages (2-710)
II. BUYER'S REMEDIES (2-711 – 717)
A. Buyer's Remedies in General
1. Where the seller fails to deliver or repudiates or the buyer rightfully rejects or justifiably revokes acceptance, the buyer may cancel and whether or not he does so may in addition to recovering so much of the price as has been paid –
b. recover damages for non-delivery under 713 (difference between the market price at the time the buyer learned of the breach and the contract price together with incidental and consequential damages under 715)
2. Where seller fails to deliver or repudiates, the buyer may also
a. recover identified goods under 2-502
b. in a proper case obtain specific performance or replevy
III. Liquidated Damages (2-718)
Where Buyer has made a payment: If it is liquidated damages, Seller may keep it. If it is a down payment, Seller may keep the smaller of $500 or 20% of the K price.
Professor Doug Holden
© 2010 Douglas S. Holden. All Rights reserved.