Judy at the rate of $8 per ton for the coal thus purchased, amounting to $16,000? Why or why not?
On December 15, Judy wrote a letter to David stating that she would sell to David all of the mine-run coal that David might wish to buy during the next calendar year for use at David’s factory, delivered at the factory at a price of $30 per ton. David immediately replied by letter to Judy, stating that he accepted the offer, that he would purchase all of his mine-run coal from Judy, and that he would need two hundred tons of coal during the first week in January. During the months of January, February, and March, Judy delivered to David a total of seven hundred tons of coal, for all of which David made payment to Judy at the rate of $30 per ton. On April 10, David ordered two hundred tons of mine-run coal from Judy, who replied to David on April 11 that she could not supply David with any more coal except at a price of $38 per ton delivered. David thereafter purchased elsewhere at the market price, namely $38 per ton, all of his factory’s requirements of mine-run coal for the remainder of the year, amounting to a total of two thousand tons of coal. Can David now recover damages from Judy at the rate of $8 per ton for the coal thus purchased, amounting to $16,000? Why or why not?
In case of a breach, the Sale of Goods Contract provides remedies for both seller and buyer. The buyer, in case of any unjustifiable breach of contract by seller, can claim for remedy, which includes providing cover. When the buyer purchases goods from elsewhere in good faith and without unreasonable delay, which the seller should have originally provided, the buyer can claim for cover to protect themselves from breach committed by the seller.
In this case, Person J has unreasonably increased the contract price, which caused damages worth $8 per ton to Person D. Person D was supposed to purchase the same amount of coal from Person J at $30 per ton, which then was purchased from the market at the cost of $38 per ton. For this reason, Person J may need to compensate Person D for the damages.
Person D can reclaim the damages worth $8 per ton from Person J as Person J committed a breach by unjustifiably increasing the contract price of supply of coal. Person D holds the right to claim for cover.