Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. Fred does not deliver the fireplaces,so Miguel purchases fireplace from Joe's Chimney's instead. Joe's charges significantly above market rate, but Miguel pays anyway because Miguel intends to sue Fred for the difference. Did Miguel act appropriately?
A) No because obtaining substitute goods is permitted only if the quantity shipped is large.
B) No because Miguel did not act in good faith and he overpaid for the goods.
C) No because obtaining substitute goods in the event of breach is appropriate only if the contract is for at least 50 units of goods.
D) No, because the UCC requires buyers to notify sellers before obtaining substitute goods.
E) Yes, because a buyer can always cover, even at an unreasonable price.

Question

Quizplus · Accepted Answer

Miguel did not act appropriately because, under the Uniform Commercial Code (UCC), when a buyer covers by obtaining substitute goods, they are expected to act in good faith and make a reasonable purchase. Overpaying significantly above the market rate does not align with the duty to mitigate damages reasonably.

Fred's Fireplaces Enters into a Contract with Miguel's Patio Supply