5. At the end of the salmon catching season, one large fishery, Salmons of Seattle, has on hand a great stock of processed frozen salmon and other fish fillets. On August 1 it contracts to sell a large quantity of salmon fillets to Better Foods, a food wholesaler in Boise, Idaho for a price of "$2 per pound F.O.B. Boise." Delivery is to be made by railroad on or before August 21, and payment is to be made within 30 days of the buyers receipt. On August 4, Salmons delivers some crates marked for Better Foods to the railroad with instructions that these be delivered to Boise, where that firm will take delivery. When a representative of Better Foods goes to the Boise railyard on August 21, she quickly discovers that the crates contain not salmon but less valuable haddock fillets. She rejects the shipment. The following prices may (or may not) help you answer the questions.

Market price of fillets at Boise on August 1 $2.04 Market price at Seattle on August 1 $1.97 Market price at Boise on August 4 $2.16 Market price at Seattle on August 4 $2.09 Market price at Boise on August 21 $3.00 Market price at Seattle on August 21 $2.97 Cost of shipping from Seattle to Boise $ .05

a. If Better Foods seeks to recover damages based on '2-713, how much should it be award

-- Anonymous, November 02, 1998

Answers

ed per pound?

-- Anonymous, November 02, 1998

FOB means the seller is responsible for delivering the goods to a designated place, meaning that if Boise is the designated place, the time of breach occurs when the goods fail to reach Boise by the designated time (by Aug 21). Assuming I have assumed correctly, according to section 2-713, the buyer gets market price at time of breach (arrival in Boise, Aug 21) minus contract price, plus consequential/incidental damages. According to this logic, Better Foods is entitled to $3 - $2, plus $.05 for shipping, or $1.05 per pound.

-- Anonymous, November 08, 1998

I would say that Better Foods should be awarded $1/lb. for damages (difference between market price at time of breach minus contract price) based on the reasoning below. The main difference between my answer and Rebecca's lies in my interpretation of what "F.O.B. Boise" means (which might be entirely incorrect.)

According to Black's Law Dictionary, the pocket edition (which I have found to be less than a stellar source of reference in the past), F.O.B. destination (i.e. FOB Boise) means that the seller is required to pay the freight charges as far as the buyer's named designation. I am assuming that Boise is here the buyer's named designation. Therefore, I am understanding this to mean that Salmons paid for the freight, (i.e. freight costs were included in the $2/lb. contract price) and that Better Foods therefore should not be awarded incidental damages for shipping.

What Better Foods can be awarded is damages amounting to market priceattime of breach - K price. Since they purchased the salmon fillets F.O.B. Boise, this means (from F.O.B. interp. above) that the good they contracted for was salmon fillets in Boise. Market price for this good on the date of breach was $3, minus the $2 K price yields recoverable damages of $1/lb.

( I am a little unsure whether I have interpreted F.O.B. correctly because both in personal situations in the past, and, I think, from Prof. Hay when he was explaining F.O.B. relative to the International Shoe case, I have heard that F.O.B. means "freight on board," which means the product is the buyer's once it leaves the seller's loading dock, in which case Rebecca's argument for Better Foods' recovery of incidental shipping costs at an additional $.05/lb. would hold. Does anyone know if "freight on board" exists as a terminology or not, or whether it is the same as "free on board" (I might have just misheard the phrase), and what F.O.B. is generally interpreted to mean? - clarification would be muchly appreciated.) Thanks.

-- Anonymous, November 08, 1998