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1. If the court had adopted the Nursing Home's interpretation of the proper rule for measuring compensation, would the Horne have been put (as Judge Quirico seems to imply) "in a better position than if the defendant had carried out his contract"? Do you think there is any basis for distinguishing, as the court does, between "defective" performance and "abandonment" of performance? Is the principal case consistent with Jacob & Youngs v. Kent, supra p. 1042, and Peevyhouse v. Garland Coal Co., supra p. 1119? (Remember that in the latter two cases the cost to complete performance of the contract exceeded any diminution in market value, whereas here, apparently, the reverse was true.)3
2. Section 2-714 of the Uniform Commercial Code ("Buyer's Damages for Breach in Regard to Accepted Goods") reads as follows:4
(1) Where the buyer has accepted goods and given notification (subsection (3) of Section 2-607) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.
(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
(3) In a proper case any incidental and consequential damages under the next section may also be recovered.
How would the principal case be decided under §2-714? The buyer's cover and market remedies (§§2-712 and 2-713) give the buyer an incentive to mitigate his damages in the event of non-delivery or repudiation by the seller. Does §2-714 create a similar incentive where the buyer elects to accept the goods even though they fail to meet his legitimate contractual expectations?
June 02, 2014
Kessler, Gilmore & Kronman
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