Technical sued Jagger Brothers for breach of contract. To what damages, if any, is Technical entitled? Explain.

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Technical sued Jagger Brothers for breach of contract. To what damages, if any, is Technical entitled? Explain.

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Technical Textile agreed by written contract to manufacture and sell 20,000 pounds of yarn to Jagger Brothers at a price of $2.15 per pound. After Technical had manufactured, delivered, and been paid for 3,723 pounds of yarn, Jagger Brothers by letter informed Technical that it was repudiating the contract and that it would refuse any further yarn deliveries. On August 12, the date of the letter, the market price of yarn was $1.90 per pound. The remaining 16,277 pounds were never manufactured. Technical sued Jagger Brothers for breach of contract. To what damages, if any, is Technical entitled? Explain.

Explanation & AnswerSolution by a verified expert

Explanation

The sale of goods contract provides remedies to the seller to protect them from any breach by the buyer that may have caused loss to the seller. The intention of these remedies is to safeguard the position of seller, which can be hampered because of a breach of contract by the buyer.
In this case, Buyer J has revoked the contract with Company T to provide 20,000 pounds of yarn at the rate of $2.15 per pound. At the time of the revocation, the market value of yarn was $1.90 per pound. The loss suffered by the seller due to the cancellation of the contract is $0.25 per pound. The seller is entitled to receive the amount of $4.069.25 (16,277*$0.25) as damages because if the contract was not cancelled, Company T would have sold the remaining 16,277 pounds of yarn at the rate of $2.15 per pound, but now Company T has to sell it at the rate of $1.90 per pound.

Verified Answer

Here, Company T can be entitled to recover for the damages that it has suffered due to the cancellation of the contract by the buyer. The seller has the right to claim the value of the difference between the contract rate and the market rate.

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