CASE PROBLEMS
Technical Textile agreed by written contract to manufacture and sell 20,000 pounds of yarn to Jagger Brothers at a price of $2.15 per pound. After Technical had manufactured, delivered, and been paid for 3,723 pounds of yarn, Jagger Brothers by letter informed Technical that it was repudiating the contract and that it would refuse any further yarn deliveries. On August 12, the date of the letter, the market price of yarn was $1.90 per pound.
The remaining 16,277 pounds were never manufactured.Technical sued Jagger Brothers for breach of contract. To what damages, if any, is Technical entitled? Explain.
Sherman Burrus, a job printer, purchased a printing press from the Itek Corporation for a price of $7,006.08. Before making the purchase, Burrus was assured by an Itek salesperson, Mr. Nessel, that the press was appropriate for the type of printing Burrus was doing.
Burrus encountered problems in operating the press almost continuously from the time he received it. Burrus, his employees, and Itek representatives spent many hours in an unsuccessful attempt to get the press to operate properly. Burrus requested that the press be replaced, but
Itek refused. Burrus then brought an action against Itek for
(a) damages for breach of the implied warranty of merchantability
(b) consequential damages for losses resulting from the press’s defective operation.
Burrus was able to prove that the actual value of the press was $1,167 and, because of the defective press, that his output decreased and he sustained a great loss of paper. Itek contends that consequential damages are not recoverable in this case since Burrus elected to keep
the press and continued to use it.
How much should Burrus recover in damages for breach of warranty? Is he
entitled to consequential damages? Why or why not?
A farmer made a contract in April to sell to a grain dealer forty thousand bushels of corn to be delivered in October. On June 3, the farmer unequivocally informed the grain dealer that he was not going to plant any corn, that he would not fulfill the contract, and that if the buyer had commitments to resell the corn, he should make other arrangements.
The grain dealer waited in vain until October for performance of the repudiated contract. Then he bought corn at a greatly increased price on the market in order to fulfill commitments to his purchasers. To what damages, if any, is the grain dealer entitled? Explain.
Through information provided by S-2 Yachts, Inc., the plaintiff, Barr located a yacht to his liking at the Crow’s Nest marina and yacht sales company.
When Barr asked the price, he was told that, although the yacht normally sold for $102,000, Crow’s Nest was willing to sell this particular one for only $80,000 to make room for a new model from the manufacturer, S-2 Yachts, Inc. Barr was assured that the yacht in question came with full manufacturer’s warranties.
Barr asked if the yacht was new and if anything was wrong with it. Crow’s Nest told him
that nothing was wrong with the yacht and that there were only twenty hours of use on the engines.
Once the yacht had been delivered and Barr had taken it for a test run, he noticed several problems associated with saltwater damage, such as rusted screws, a rusted stove, and faulty electrical wiring. Barr was assured that Crow’s Nest would pay for these repairs.
However, as was later discovered, the yacht was in such a damaged condition that Barr experienced great personal hazard the two times that he used the boat. Examination by a marine expert revealed clearly that the boat had been sunk in saltwater prior to Barr’s purchase.
The engines were severely damaged, and there was significant structural and equipment damage as well. According to the expert, not only was the yacht not new, it was worth at most only one-half of the new value of $102,000.
What should Barr be able to recover from S-2 Yachts and Crow’s Nest?
Lee Oldsmobile sells Rolls-Royce automobiles. Mrs. Kaiden sent Lee a $25,000 deposit on a used Rolls-Royce with a purchase price of $155,500. Although Lee informed Mrs. Kaiden that the car would be delivered in November, the order form did not indicate the delivery date and contained a disclaimer for delay or failure to deliver due to circumstances beyond the dealer’s control.
On November 21, Mrs. Kaiden purchased another car from another dealer and canceled her car from Lee.
When Lee attempted to deliver a Rolls Royce to Mrs. Kaiden on November 29, Mrs. Kaiden refused to accept delivery. Lee later sold the car for $150,495.
Mrs. Kaiden sued Lee for her $25,000 deposit plus interest. Lee counterclaims, based on the terms of the contract, for liquidated damages of $25,000 (the amount of the deposit) as a result of Mrs. Kaiden’s breach of contract.
What are the rights of the parties?
Servebest contracted to sell Emessee two hundred thousand pounds of 50 percent lean beef trimmings for $105,000.
Upon a substantial fall in the market price, Emessee refused to pay the contract price and informed Servebest that the contract was canceled. Servebest sues Emessee for breach of contract
(a) damages for the difference between the contract price and the resale price of the trimmings and
(b) incidental damages. Decision?
Mrs. French was the highest bidder on eight antique guns at an auction held by Sotheby & Company. Mrs. French made a down payment on the guns but subsequently refused to accept the guns and refused to pay the remaining balance of $24,886.27 owed on them.