Contract Law 72a V Locks v Wade

TL;DR

Lost volume damages allow sellers to recover damages from a buyer's breach of contract when they can resell the goods to another buyer, even if they have an adequate supply of goods.

Transcript

imagine that you and a prospective homeowner have entered a contract you agree to sell and the prospective homeowner agrees to buy your home for $500,000 the buyer breaches but with no trouble you quickly reach an identical agreement with another purchaser for $500,000 you are in exactly the same position you expected to be in despite the first buy... Read More

Key Insights

• 😚 Lost volume damages allow sellers to recover damages even if they have enough goods to meet the demand.
• 🌂 The Locks v. Wade case established the concept of lost volume damages in contract law.
• 💼 The UCC, specifically Section 2-708, provides provisions for sellers to claim damages in the case of buyer breach.
• 👋 The supply and demand dynamics determine the impact of a breach on the volume of goods sold.
• 🔇 Lost volume damages are only applicable if the breach is a but-for cause of the change in the seller's volume.
• ⚾ Section 2-708 of the UCC calculates damages based on the difference between market price and contract price, with allowances for incidental damages.
• 👋 Sellers with unlimited quantities of goods and who resell goods after a breach can claim damages if the measure provided in Section 2-708(1) is inadequate.

Questions & Answers

Q: What are lost volume damages?

Lost volume damages allow sellers to recover damages when they can resell goods to another buyer after a breach of contract, even if they have enough goods to meet the demand.

Q: What was the outcome of the Locks v. Wade case?

Locks, the lessor, sued Wade, the lessee, for breach of contract. The court ruled in favor of Locks, allowing him to recover damages representing the profits he would have made if the contract had been performed.

Q: What is the role of supply and demand in determining lost volume damages?

In cases where the supply of goods exceeds the demand, a breach of contract can impact the volume that the seller is able to sell, leading to lost volume damages. If the demand exceeds the supply, there would be no lost volume damages.

Q: How does Section 2-708 of the UCC deal with damages in buyer breach cases?

Section 2-708 provides the standard measure of damages for non-acceptance or repudiation by the buyer. It calculates the difference between the market price at the time and place of tender and the unpaid contract price, with allowances for incidental damages.

Summary & Key Takeaways

• Lost volume damages are applicable in cases where a seller can resell goods to another buyer after a breach of contract, even if they have an adequate supply of goods.

• The case of Locks v. Wade, decided by the New Jersey Superior Court in 1955, established the concept of lost volume damages.

• The Uniform Commercial Code (UCC) provides provisions, such as Section 2-708, for sellers to claim damages in the case of a buyer's breach.