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Seller’s Remedies in Breach of Contract

Under the Uniform Commercial Code (“UCC”), a selling merchant has a number of option when the buying merchant commits a breach of contract. Specifically, when the buyer wrongfully rejects/revokes either the contract or the goods or repudiates the contract — in whole or in part — the seller may (a) withhold delivery of the goods, (b) stop delivery, (c) stop production and/or scrap the goods and/or make other reasonable arrangements for the goods, (d) re-sell the goods elsewhere and recover damages for the difference in contract price and incidental damages, (e) recover compensatory market price damages or in a proper case the price, (f) or cancel the contract. While several of these items may merit clarification, the focus here is on item (e).

Section 400.2-708 provides “traditional” damages for nonacceptance or repudiation. In terms of how it calculates damages, the damages are the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages. “Market price” is determined in accordance with the price of such goods prevailing at the time when the aggrieved party learns of the breach/repudiation. See Section 400.2-723, RSMo. “Incidental damages” include commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach. See Section 400.2-710, RSMo. If this is inadequate to put the seller  in as good a position as performance would have put it, § 400.2-708(2) provides that the court must award profit, including reasonable overhead, which the seller would have made but for the breach. American Laminates, Inc. v. J.S. Latta Co., 980 S.W.2d 12 (Mo. Ct. App. 1998).

Section 400.2-709 is slightly different. It provides, among other things, that together with incidental damages, the seller may recover the price of goods accepted and of good identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price. If the seller is able to sell the goods, the buyer is entitled to a credit for that sum. This section is narrower in that it only authorizes the seller’s recovery of the price for (1) “goods accepted[,]” (2) “conforming goods lost or damaged[,]” or (3) “goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.”See Far East Services v. Tracker Marine, 246 S.W.3d 486 (Mo. Ct. App. 2007).

With respect to both of these statutes, the burden is on the seller to prove the amount of damages with reasonable certainty. Scullin Steel Company v. Paccar, Inc., 708 S.W.2d 756, 761 (Mo. Ct. App. 1986). There needs to be a basis for a rational estimate of damages without resorting to speculation. Meridian Enterprises Corporation v. KCBS, Inc., 910 S.W.2d 329, 331 (Mo. Ct. App. 1995). The remedies for the breach are liberally administered so that the seller is put in as good a position as if the buyer had fully performed. See Section 400.1-106, RSMo.

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