How much should Burrus recover in damages for breach of warranty? Is he entitled to consequential damages? Why or why not?
Sherman Burrus, a job printer, purchased a printing press from the Itek Corporation for a price of $7,006.08. Before making the purchase, Burrus was assured by an Itek salesperson, Mr. Nessel, that the press was appropriate for the type of printing Burrus was doing. Burrus encountered problems in operating the press almost continuously from the time he received it. Burrus, his employees, and Itek representatives spent many hours in an unsuccessful attempt to get the press to operate properly. Burrus requested that the press be replaced, but Itek refused. Burrus then brought an action against Itek for (a) damages for breach of the implied warranty of merchantability and (b) consequential damages for losses resulting from the press’s defective operation. Burrus was able to prove that the actual value of the press was $1,167 and, because of the defective press, that his output decreased and he sustained a great loss of paper. Itek contends that consequential damages are not recoverable in this case since Burrus elected to keep the press and continued to use it. How much should Burrus recover in damages for breach of warranty? Is he entitled to consequential damages? Why or why not?
The sale of goods contract entitles a buyer to recover for damages that may have occurred due to the breach of warranty and also for the consequential damages to protect the buyer's position. In this case, Seller I provided defective material to Buyer B. Buyer B paid the warranted price for the material, $7,006.08. The actual cost of the defective material, as determined by Buyer B, is $1,167. So, Buyer B is entitled to recover the excess amount of $5,839,08.
Evidence supporting the scenario wherein Buyer B can receive payment with respect to consequential damages:
Due to non-replacement of defective material by the seller, Buyer B suffered a great loss in business. The production volume decreased resulting in less profit. It was a compulsion for Buyer B to keep the machine; Buyer B continued using the machine in order to keep running their business. So, the seller here is liable to compensate the buyer.
Evidence supporting the scenario wherein Buyer B cannot receive payment with respect to consequential damages:
Seller I is claiming that Buyer B has kept the machine and used it for a long time. Buyer B has known that the machine is defective since the day of the purchase but Buyer B has kept the machine and used it for production. After some time of the purchase, Buyer B requested it to replace the machine, which should have been done the day Buyer B noticed that machine is not working properly. So, the seller, here, is not liable to pay for consequential damages.
In this case, Buyer B should receive the difference between the value of the warranted goods and value of the goods accepted, with regards to breach of warranty by Seller I.
Consequential loss is an indirect loss caused by the damage of property or equipment relating to business. The two possible cases with Buyer B are:
Buyer B can receive the payment with respect to the consequential damages.
Buyer B cannot receive the payment with respect to the consequential damages.