Brief Fact Summary. Plaintiff Laredo Hides Co., Inc. and Defendant H & H Meat Products Co., Inc., entered into a contract for the sale of cattle hides, which the Court found Defendant had repudiated. Plaintiff purchased substitute hides for substantially more than the contract price and requested damages for purchasing more expensive hides to cover its loss.
Synopsis of Rule of Law. Damages for breach by the seller are measured by subtracting either the market price at the time the buyer learned of the breach or the actual cost of cover from the contract price, plus incidental and consequential damages.
As the manifested intent of the parties can make time to be of the essence, McKnight it is also true that the acceptance of late performance may indicate that it was not intended that time be of the essence.View Full Point of Law
Issue. What is the proper measure of damages for Defendant’s breach of contract?
Held. The Uniform Commercial Code states that the proper measure of damages is the difference between the market price at breach or the cost of cover and the contract price plus incidental and consequential damages. Where cover has actually been obtained, there is no need to prove the market price at the time of breach, but rather, the price is presumed proper. The burden is on the seller to prove that cover was not properly obtained. Here, Plaintiff obtained cover, and Defendant offered no evidence that cover was not properly obtained. Hence, the damages were set at $152,960.04.
Discussion. (Damages for breach of contract) = (market price at breach or actual cost of cover) – (contract price) + (incidental and consequential damages)