Under the seller's damages, if the seller does not resell in good faith or does not resell, which formula applies?

Under the seller's damages, if the seller does not resell in good faith or does not resell, which formula applies?

• A. Market price minus contract price
• B. Lost profit
• C. Contract price minus resale price
• D. Contract price minus market price

Answer: (D)

When the seller is dealing with a buyer breach, the remedy depends on whether the seller resells the goods. If the seller does not resell in good faith or does not resell at all, the damages are measured by the contract price minus the market price at the time and place tender was due. In other words, the seller is compensated for the loss in value reflected by the current market price, not by what could have been obtained through a resale. So the proper formula is contract price minus market price. The other formulas fit different situations: resale in good faith uses contract price minus resale price (plus incidental damages and minus saved costs), and market price minus contract price would not correctly measure the seller’s loss in this non-resale scenario.

When the seller is dealing with a buyer breach, the remedy depends on whether the seller resells the goods. If the seller does not resell in good faith or does not resell at all, the damages are measured by the contract price minus the market price at the time and place tender was due. In other words, the seller is compensated for the loss in value reflected by the current market price, not by what could have been obtained through a resale. So the proper formula is contract price minus market price. The other formulas fit different situations: resale in good faith uses contract price minus resale price (plus incidental damages and minus saved costs), and market price minus contract price would not correctly measure the seller’s loss in this non-resale scenario.