Contracts II, Pages 1076–1079

Neri v. Retail Marine Corp.

Court of Appeals of New York, 1972

Facts:

Plaintiffs contracted to purchase a new boat from defendant for $12,587.40. Plaintiff paid a $4,250 deposit in exchange for immediate delivery. Six days later, plaintiffs' lawyer wrote defendant to rescind the sales contract, and plaintiff would be in the hospital and unable to pay. Defendant had already ordered and received the boat from the manufacturer by the time it received the lawyer's letter. Four months later, it sold the boat to someone else for the same price.

Plaintiff sued for the recover of his deposit. Defendant counterclaimed for $4,250.

Plaintiff's Argument:

Defendant would sold the boat for the same price, so it has no damages to recover.

Defendant's Argument:

If plaintiff did not breach, defendant would have sold two boats, earning a $2,579 profit. It also incurred $674 in costs to store the boat an extra four months.

Procedural History:

Trial court awarded plaintiff $3,750 and defendant $500. The Appellate Division affirmed.

Issue:

What damages should be given because of plaintiff's breach?

Rule:

Reasoning:

Subsection (1)'s provision of damages of the amount more left unpaid than the market price and incidental damages is clearly inadequate to put defendant in the position he would have been in had the contract not been breached. Instead subsection (2)'s provision of expected profit plus incidental losses applies.

Holding:

Defendant lost $2,579 in profit and had $674 in incidental damages. Plaintiff's recovery is offset by this amount for a recovery of $997. Affirmed as modified.

See Also:

UCC § 2-718
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