U.C.C. Damages

Question 1

§2-102: The U.C.C. applies to the transaction of___…

Answer 1

…GOODS

(if you miss THIS, then shoot yourself… and DONT MISS)

Question 2

PREDOMINANT PURPOSE TEST is used when ___…

Answer 2

…there is a mixed contract (contract for goods and services), the court should determine whether the predominant purpose of the contract is that of goods or services

Question 3

§2-205: “Goods”

“Means all things (including manufactured goods) which are ___…

Answer 3

… MOVABLE AT THE TIME OF IDENTIFICATION to the contract for sale other than the money in which the price is to be paid, investment securities and things in action

Question 4

General Rule: §1-106 “Remedies provided by this act shall be liberally administered to the end that __…

Answer 4

… the aggrieved party may be put in as good a position as if the other party had fully performed…”

* mirrors the common law expectancy measure

Question 5

Buyer’s Damages: §2-713

Answer 5

(1) “…The measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this article, but less expenses saved in consequence of the seller’s breach

o (Market Price – Contract Price) + Incidental and Consequential Damages – Expenses Saved)

*Use §2-715 to determine Incidental and Consequential Damages

Expenses Saved: Costs avoided due to breach

Question 6

§2-715: Incidental and Consequential Damages

Answer 6

(1) Incidental – Expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected; any commercially reasonable charges, expenses or commissions in connection with effecting cover; and any other reasonable expense incident to the delay or other breach – Basically, money spent having to find replacement goods
(2) Consequential – (a) any loss resulting from general or particular requirement and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of warranty –

*We assume buyers are not the end user, and goods used to make an independent profit

Question 7

§2-713

Is available only to the extent that the buyer has NOT covered… Buyer isn’t required to cover, but if they do then…

Answer 7

…§2-712 applies

* §2-712(3)

Question 8

§2-712: “Cover”; Buyer’s Procurement of Substitute Goods

Answer 8

1) After a breach the buyer may “cover” by making in good faith and without unreasonable delay** any **reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (§2-715), but less expenses saved in consequence of the seller’s breach.

(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy.
This encourages buyers to cover (buy substitute goods) so the flow of commerce doesn’t stop

(Cost of Cover – Contract Price) + Incidental and Consequential Damages – Expenses Saved

Question 9

Three Requirements to Cover under §2-712

Answer 9

• *1. Good faith** – if you cover by buying a Cadillac when the original contract was for a Pinto it is clearly not in good faith
• *2.** Without Unreasonable Delay – Can’t wait until the price goes up to cover
• *3.** Reasonable Purchase – Some flexibility, doesn’t have to be the same product