A, Inc., enters into a contract with B Service to fix A's precisely engineered molding equipment. If B delays the repair for five days, knowing that A will lose a certain percentage of profit for the delay, A might be awarded consequential damages to
A) establish, as a matter of principle, that B acted wrongfully.
B) provide A with funds for a foreseeable loss beyond the contract.
C) provide A with funds for its loss of the bargain.
D) punish B and set an example to deter others from similar acts.

Question

Quizplus · Accepted Answer

Consequential damages are intended to compensate the non-breaching party for a loss beyond the contract, which was reasonably foreseeable at the time of the contract. In this case, the delay caused A to lose a certain percentage of profit, which was a foreseeable consequence of B's breach of contract. Therefore, A may be awarded consequential damages to cover this loss of profit. Choice A is incorrect because consequential damages are not meant to establish wrongdoing, but rather to compensate for losses. Choice C is incorrect because the loss of the bargain refers to lost economic value from paying too much for a product or service, which is not applicable in this scenario. Choice D is incorrect because the purpose of consequential damages is to compensate for losses, not to punish the breaching party.

A, Inc, Enters into a Contract with B Service to Fix