Can Teradyne recover from Teledyne for lost profits resulting from the breach of contract? Explain.

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Can Teradyne recover from Teledyne for lost profits resulting from the breach of contract? Explain.

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Teledyne Industries, Inc., entered into a contract with Teradyne, Inc., to purchase a T-347A transistor test system for the list and fair market price of $98,400 less a discount of $984. After the system was packed for shipment, Teledyne canceled the order, offering to purchase a Field Effects Transistor System for $65,000. Teradyne refused the offer and sold the T-347A to another purchaser pursuant to an order that was on hand prior to the cancellation. Can Teradyne recover from Teledyne for lost profits resulting from the breach of contract? Explain.

Explanation & AnswerSolution by a verified expert

Explanation

Company Ta would have sold the system to the pursuant company even if there was no breach of contract by Company Te.
So, this is not considered to be the resale of goods. The claim can be made for the breach of contract since Company Te has wrongfully rejected the purchase. The loss of profit to Company Ta can also be recovered.

Verified Answer

Company Ta has the right to recover the damages due to non-acceptance of the system by Company Te. Company Te has indulged in breach of contract. So, the difference in the contract price and the market price along with the incidental damages can be recovered by Company Ta.
The system had a market prior to the cancellation. So, Company Ta has not faced any economic loss from the resale. The damages for the breach and reduction in volume of sales can be claimed from Company Te.

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