Sales Contracts - Breaches and Remedies

Sales

 Contracts

 –

 Breaches

 and

 Remedies

1

Sales Contracts – Breaches and Remedies

Flavia Ana Guez

Business Law for Managers

Prof. Maxine Mckenley

March, 2015

Sales

 Contracts

 –

 Breaches

 and

 Remedies

2

In a business environment, you may at times find yourself caged by

circumstances. From time to time, you might have to make decisions that require

breaching a contract. As a merchant, the Uniform Commercial Code governs the impact

of the breach of your contract whether you are the seller or the buyer.

Seller`s remedies for breach of contract

If a buyer repudiates/ breaches a contract, the seller`s remedies and options are as

follows:

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•

•

•

•

Withhold delivery of the goods

Stop delivery of goods in transit

Resell the goods and recover damages

Recover damages equal to the difference between the market price and the K

price

Cancel the contract

In a scenario where the seller chooses to resell the goods, the resale must be made in

good faith and in a commercially reasonable manner. In this situation, the seller may

recover the difference between the resale price and the contract price, together with any

incidental damages, but less expenses saved as a result of the buyer’s breach. If the

resale of the goods is done via a private sale, the seller must give the buyer reasonable

notice of the intended sale. If a reasonable notice is not given to the buyer, the seller

might be prevented from recovering under this remedy.

If the goods are not resold by the seller, the difference between the contract price and the

market price under the contract can be collected. The seller can instead choose to collect

it`s lost profit in the situation where the contract price/market price differential will not

adequately compensate seller. This might occur if the goods are sold at a fixed price, and

the original buyer's default causes the seller to lose out on an additional sale it...