Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

تمرين 10

FACTS The plaintiff, Bigelow-Sanford, Inc., contracted with the defendant, Gunny Corp., for the purchase of 100,000 linear yards of jute at $0.64 per yard. Gunny delivered 22,228 linear yards in January 1979. The February and March deliveries required under the contract were not made, and eight rolls (each roll containing 66.7 linear yards) were delivered in April. With 72,265 linear yards ultimately undelivered, Gunny told Bigelow- Sanford that no more would be delivered. In mid-March, Bigelow-Sanford turned to the jute spot market to replace the balance of the order at a price of $1.21 per linear yard. As several other companies had also defaulted on their jute contracts with Bigelow-Sanford, the plaintiff purchased a total of 164,503 linear yards on the spot market. The plaintiff sued the defendant to recover losses sustained as a result of the breach of contract. Gunny appealed from a judgment in favor of Bigelow-Sanford.
DECISION Judgment for Bigelow-Sanford affirmed.
OPINION Kravitch, J. Gunny contends that appellee's [Bigelow-Sanford's] alleged cover purchases should not have been used to measure damages in that they were not made in substitution for the contract purchases, were not made seasonably or in good faith and were not shown to be due to Gunny's breach. [W]e disagree. ***
UCC § 2-712 defines cover:
(1) After a breach *** the buyer may ''cover'' by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages *** , but less expenses saved in consequence of the seller's breach.
(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy.
***
Most importantly, ''whether a plaintiff has made his cover purchases in a reasonable manner poses a classic jury issue.'' [Citation.] The district court thus acted properly in submitting the question of cover damages to the jury, which found that Gunny had breached, appellee had covered, and had done so in good faith without unreasonable delay by making reasonable purchases, and was therefore entitled to damages under § 2-712. Gunny argues Bigelow is not entitled to such damages on the ground that it failed to make cover purchases without undue delay and that the jury should not have been permitted to average the cost of Bigelow's spot market purchases totalling 164,503 linear yards in order to arrive at the cost of cover for the 72,265 linear yards Gunny failed to deliver. Both arguments fail. Gunny notified Bigelow in February that no more jute would be forthcoming. Bigelow made its first spot market purchases in mid- March. Given that it is within the jury's province to decide the reasonableness of the manner in which cover purchases were made, we believe the jury could reasonably decide such purchases, made one month after the date the jury assigned to Gunny's breach, were made without undue delay. The same is true with respect to Gunny's second argument: Bigelow's spot market purchases were made to replace several vendors' shipments. Bigelow did not specifically allocate the spot market replacements to individual vendors' accounts, however, nor was there a requirement that they do so. The jury's method of averaging such costs and assigning them to Gunny in proportion to the amount of jute if [sic] failed to deliver would, therefore, seem not only fair but well within the jury's permissible bounds.
INTERPRETATION If the buyer makes substitute purchases in good faith and without unreasonable delay, he may recover as damages the difference between the cost of cover and the contract price plus any incidental damages, but minus any expenses he saved because of the seller's breach.
CRITICAL THINKING QUESTION Do you agree with the remedy of cover? Explain.