John needs a new car and goes to the local dealer for Worldwide Motors,a global car manufacturer.John negotiates a deal with the local dealer to buy a new midsize model,the Albatross,for $22,000.The dealer cost on this car is $19,000.John then decided against the Albatross and breached the contract.John had not yet made any payment to the dealer.Later the dealer then sold this car to another customer for $21,600.The dealer also incurred $200 in costs connected with John's canceled order.Assuming that the dealer can get as many Albatrosses as it wants,how much can it recover in damages from John?

Question

Quizplus · Accepted Answer

The damages that the dealer can recover from John would include the difference between the contract price and the market price of the car, and any incidental expenses incurred by the dealer as a result of the breach.

In this case, the contract price was $22,000 and the dealer cost was $19,000, so the dealer's expected profit was $3,000. However, since the car was sold to the second customer for $21,600, the actual damages suffered by the dealer would be $400 ($22,000 - $21,600).

In addition, the dealer incurred $200 in costs connected with John's canceled order, which can also be recovered as incidental expenses.

Therefore, the total damages that the dealer can recover from John would be $600 ($400 + $200), which is option B.

John Needs a New Car and Goes to the Local