The fair market value of a 10-foot fishing boat is $1,000.In a special promotion,J's Marina purchases a 10-foot fishing boat for $900.The boat is badly scratched when it arrives.J's Marina,however,accepts the shipment and notifies the seller of the defect.The boat as delivered has a value of $800.If the damaged boat is a breach of warranty by the seller,the buyer may recover from the seller:

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The fair market value of the boat is $1,000, but J's Marina only paid $900, which means the boat was worth $900 when it was purchased. However, due to the scratches, the boat's value decreased to $800. This means the seller breached the warranty of merchantability, which requires that the goods sold be reasonable for their intended use. As a result, J's Marina can recover the difference between the value of the boat as delivered ($800) and the value of the boat if it had been as warranted ($1,000), which is $200. Additionally, J's Marina can recover incidental and consequential damages, which could include the cost of repairing the scratches, lost profits from not being able to use the boat, and any other costs directly caused by the breach.

The Fair Market Value of a 10-Foot Fishing Boat Is