What are the rights of the parties?

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What are the rights of the parties?

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Robert in Chicago entered into a contract to sell certain machines to Terry in New York. The machines were to be manufactured by Robert and shipped F.O.B. Chicago not later than March 25. On March 24, when Robert is about to ship the machines, he receives a letter from Terry wrongfully repudiating the contract. The machines cannot readily be resold for a reasonable price because they are a special kind used only in Terry’s manufacturing processes. Robert sues Terry to recover the agreed price of the machines. What are the rights of the parties?

Explanation & AnswerSolution by a verified expert

Explanation

The sale of goods contract gives the seller the right to recover the price of the goods if:
 

The buyer has accepted the goods.
The buyer is unable to pay the price of the conforming goods.
The identified goods in the contract cannot be resold.

In this case, Buyer T has unreasonably not accepted the machine. The machine can also not be easily resold since the machine is of a special type and can be used only in Buyer T's production process. So, here, Seller R has the right to recover the price of machine including incidental damages.
Buyer T holds no right against the seller since Buyer T has unreasonably rejected the goods. If the seller had not provided the goods till the due date, Buyer T, then, may have claimed the remedy for damages because of the nondelivery of goods plus incidental damages.

Verified Answer

In this case, Seller R may have the right to recover the agreed amount of the machine from Buyer T since Buyer T has unjustifiably rejected the machine.
Buyer T does not hold any right against Seller R since Buyer T has unjustifiably rejected the machine. Buyer T may have claimed the right of nondelivery of goods if Buyer Y had not received the machine till March 25.

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