Week 4 Tutorial Questions
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Jada Porter
Fundamentals of Business Law 2/6/2024
Week 4: Tutorial Questions
TQ 4.1:
If a buyer breaches a sales contract and the price goes down, what are the seller’s options? If the seller breaches and the price goes up, what are the buyer’s options?
According to the Uniform Commercial Code (U.C.C), if a buyer breaches a sales contract
and the price goes down, the seller can resell their item to another buyer. In this resale, the seller may “recover the difference between the resale price and the contract price plus
incidental expenses” (Section § 2-703
). If the seller is unable to conduct a resale for their item, they may be able to “recover the difference between the contract price and the market price at the time and place of tender plus incidental expenses” (Section § 2-703
). According to the U.C.C, if a seller breaches a sale contract and the price goes up, buyer can recover by “making any reasonable purchase of substitute goods in good faith and without unreasonable delay” (Section § 2-711
). If a buyer is unable to purchase substitute
items, they may recover damages based on “the difference between the market price at the time when the buyer learned of the breach and the contract price, together with incidental and consequential damages less expenses saved” (Section § 2-711
). Citations: U.C.C Section § 2-703
U.C.C Section § 2-711
TQ 4.2:
In
State v. Ernst & Young
, why did the court find that the state had not met its duty to mitigate damages?
The court found that the state had not met its duty to mitigate damages. The state argued that their duty to mitigate damages should not be imposed because they claim it would diminish the purposes of public bidding. The state also argued that they “could not have awarded the contract to Covansys without creating undue risk to the public” (
386 N.J. Super. 600, 902 A.2d 338
). However, the court disagreed with the State claiming that “the obligation to mitigate damages is not incompatible with the purpose of public bidding” (
386 N.J. Super. 600, 902 A.2d 338
). The court found that the State’s decision to choose Bearing Point was unreasonable because Covansys could have provided the lowest cost. Citation: State v. Ernst & Young, L.L.P.
, 386 N.J. Super. 600, 902 A.2d 338 (App. Div. 2006)
TQ 4.3:
Why didn’t the duty to mitigate damages apply in
Gianetti v. Norwalk Hospital
?
In Gianetti v. Norwalk Hospital, the duty to mitigate damages did not apply because the court ruled that the plaintiff was a “lost volume seller” (
2009 Ct. Sup. 6915
). As a lost volume seller, the plaintiff was not required to mitigate damages.
Citation: Gianetti v. Norwalk Hospital
, 2009 Ct. Sup. 6915 (Conn. Super. Ct. 2009)
TQ 4.4:
You agree to sell your used car to a neighbor for a price of $2,000, but then you have a change of heart. How likely is it that a court would force you to go through with the transaction, as opposed to simply paying your neighbor the difference between the contract price and the price of a comparable used car? Would your answer be different if the car was a vintage used car worth $50,000?
In this scenario, the court would not force me to complete the sale transaction for the car. The court would allow me to simply pay my neighbor the difference between the contract
price of my used car and the price of a comparable used car for their purchase. This would offer of relief for the neighbor. The solution may be different if the car was a vintage used car worth $50,000. Since the car is vintage, the court may consider the vehicle as a unique good. Awarding money damages would be inadequate if my neighbor
cannot find a similar car to buy as a substitute. Under these circumstances, the court could enforce the original sale contract.
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