Harold agreed to sell a widget to Sheila for $10 000.Sheila paid the purchase price immediately and Harold was required to deliver the widget on June 1.In fact,Harold did not deliver the widget until June 21.As a result,Sheila was unable to perform a contract for ABC Inc.on June 19 that would have paid her $15 000.Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

The correct answer is E. Sheila's damages may be reduced on the basis of both the concept of remoteness and the concept of mitigation. Remoteness refers to whether the loss was a direct or indirect consequence of the breach, and mitigation refers to whether Sheila took reasonable steps to minimize her loss after the breach occurred. In this case, it is likely that the loss of the ABC Inc. contract was a direct consequence of Harold's breach, so the issue of remoteness is not likely to arise. However, the extent to which Sheila took steps to mitigate her loss by seeking a replacement widget or by pursuing other business opportunities will be relevant to the calculation of damages. Thus, the damages Sheila can recover from Harold are subject to both the concepts of remoteness and mitigation.

Harold Agreed to Sell a Widget to Sheila for $10