Jones entered into a contract to purchase a 1957 Edsel automobile from Smith for $2,000. Unknown to Smith, Jones had an opportunity to resell that car for $5,000 to Brown, who wanted to use it as a prop in a movie being shot in town. Before the car was delivered and payment made, it was destroyed by fire, when one of Smith's employees carelessly spilled a can of gasoline in the garage where the car was kept. If the court found that the normal market value for such a vehicle was only $3,000, which of the following statements is correct with respect to the appropriate remedy that should be awarded by the court for such a breach of contract?
A) In these circumstances, there should be no remedy since the contract has been frustrated.
B) Because of the uniqueness of the vehicle, the court should award specific performance.
C) The court should award only $1,000, the difference between the market price and the purchase price.
D) The court could award $3,000.
E) In these circumstances, the court should award $5,000, representing the lost profits.

Question

Quizplus · Accepted Answer

The court should award the difference between the market value ($3,000) and the contract price ($2,000), which is $1,000, as this represents the loss Jones incurred due to the breach.

Jones Entered into a Contract to Purchase a 1957 Edsel