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Contracts • Remedies for Unexcused Non-Performance
K#158
Legal Definition
Either:
(A): (Market Price at Time of Discovery of Breach) - (Contract Price)
or
(B): (Reasonable Cover Price) - (Contract Price)
(A): (Market Price at Time of Discovery of Breach) - (Contract Price)
or
(B): (Reasonable Cover Price) - (Contract Price)
Plain English Explanation
If a seller sells goods to a buyer, but breaches the agreement before actually giving those goods to the buyer, the buyer can either sue for the lost value of the goods if they had gotten them on time, or they can sue for the cost to implement a back-up plan.
Hypothetical
Hypo 1: Sam sells toilet paper. Bob runs a grocery store. Bob orders $1,000 worth of toilet paper for his grocery store to be delivered within 1 week. A day after Bob's order, COVID-19 causes a shortage of toilet paper and Sam is unable to ship Bob his order. On the day that Bob should have received his toilet paper from Sam, prices have skyrocketed and the market price of the same amount of toilet paper is $4,000. Result: Bob can sue Sam for the difference between the Market Price at the time of breach ($4,000) and the contract price ($1,000), which would be $3,000.
Visual Aids
Related Concepts
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