Kaiden’s breach of contract. What are the rights of the parties?
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Lee Oldsmobile sells Rolls-Royce automobiles. Mrs. Kaiden sent Lee a $25,000 deposit on a used Rolls-Royce with a purchase price of $155,500. Although Lee informed Mrs. Kaiden that the car would be delivered in November, the order form did not indicate the delivery date and contained a disclaimer for delay or failure to deliver due to circumstances beyond the dealer’s control. On November 21, Mrs. Kaiden purchased another car from another dealer and canceled her car from Lee. When Lee attempted to deliver a Rolls-Royce to Mrs. Kaiden on November 29, Mrs. Kaiden refused to accept delivery. Lee later sold the car for $150,495. Mrs. Kaiden sued Lee for her $25,000 deposit plus interest. Lee counterclaims, based on the terms of the contract, for liquidated damages of $25,000 (the amount of the deposit) as a result of Mrs. Kaiden’s breach of contract. What are the rights of the parties? |
Explanation
The following statements explain the rights of each party:
Company L, as promised in the contract, has performed the delivery within the month of November. Company L has the right to claim the damages caused because of the breach of contract, which amounts to the economic loss caused because of the sale to another party.
Individual K has breached the contract. So, a limitation can put on the damage that can be claimed on the amount of loss incurred due to the breach. Individual K has the right to recover the payment made to Company L as an advance.
Verified Answer
The privileges that each party to contract have are as follows:
Rights of Company L: Company L has the right to claim for the breach of contract of the buyer. Under Article 2 of the Uniform Commercial Code, the liquidated damages caused to Company L because of the breach being a reasonable amount can be claimed. Company L can claim the loss in the sale of the car to another customer.
Rights of Individual K: Individual K has breached the contract of sale. So, Individual K can claim for the limitation of the damages to only the loss in the sale price faced by Company L and claim the advance paid by Individual K.
