UCC Damages Q4 pt3greenspun.com : LUSENET : Lessig's Contracts : One Thread
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
c. Suppose that Salmons contracted for $1.98 F.O.B. Seattle, but never makes any shipment to Boise at all. Better Foods only becomes aware of this when its representative contacts the railroad on April 21 and asks when would be a convenient time to pick up the shipment she has been told to expect. She is told the railroad has not received any shipment from Salmons intended for Better Foods. She contacts Salmons and that firm admits it never made the shipment. If Better Foods sues Salmons asking for recovery under '2-713, to how
-- Anonymous, November 02, 1998
much is it entitled?
-- Anonymous, November 02, 1998
From the facts alone, it seems that in this case, Better Foods can collect $0.99/lb. in damages for breach of contract (calculations below). If Better Foods can prove that it incurred any additional incidental damages or consequential damages, it may be able to collect for those as well; if it saved any expenses due to the breach, these should be deducted from the reward amount. I could not immediately see any such incidental/ consequential damages nor any expenses saved from the text.
The $0.99/lb. was derived by applying the formula of market price at time of breach minus contract price. The product contracted for here was salmon fillets in Seattle (as per the F.O.B. Seattle clarification -- Better Food got possession of the fillets in Seattle). Therefore, market price at time of breach was $2.97 (fillets in Seattle on 8/21), contract price was $1.98 and $2.97 - $1.98 = $0.99/lb. in damages.
Since the fillets were never shipped, the buyer's incidental cost of $0.05/lb shipping was never incurred and cannot be collected. I do not think this $0.05 counts as an "expense saved in consequence of seller's breach" which under 2-713 should be deducted from the damages amount, but I may be wrong on this, since I am having a hard time determining what would be a valid example of an expense saved due to breach (see post on Q5) -- if anyone is clear on what sorts of expenses the UCC is referring to with regards to these "expenses saved", I'd really, really appreciate hearing your thoughts. Thanks.
-- Anonymous, November 08, 1998
Should the market price used in calculating damages be that of Seattle or Boise? I guess I am also unsure about the meaning of F.O.B. Seattle. I took it to only be an indication of when the risk of loss passed on to the buyer, and not necessarily an indication of the place of tender or the place of arrival. (What exactly is the place of tender?) The official comment said that the yardstick to be used in measuring damages is "the market in which the buyer would have obtained cover had he sought that relief." Since it seems that both sides agree that Better Foods was supposed to pick up the shipment at Boise, isn't Boise the market in which Better Foods would reasonably have sought cover? Thanks,
-- Anonymous, December 30, 1998