Printable Format84-2-713. Buyer's damages for nondelivery or repudiation. (1) Subject to the provisions of this article with respect to proof of market price (section 84-2-723), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this article (section 84-2-715), but less expenses saved in consequence of the seller's breach.
(2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
History: L. 1965, ch. 564, ยง 109; January 1, 1966.
KANSAS COMMENT, 1996
1. This section provides a buyer with an alternative to cover in fixing the amount of damages. The remedy under this section is the counterpart of the seller's market damage remedy under 84-2-708(1). Although subsection (1) refers only to cases of nondelivery or repudiation by the seller, this remedy also is available when the buyer rejects or revokes acceptance of the goods. See 84-2-711(1)(b) and 84-2-713(2). Whether a buyer that has covered may rely on this section is addressed in 1996 Kansas Comment 3 to 84-2-712.
2. Under subsection (1), the measure of damages is market price less contract price plus incidental and consequential damages, but less any expenses saved as a result of the seller's breach. For discussion of when shipping expenses are saved as a result of a breach, see Panhandle Agri-Service, Inc. v. Becker, 231 K. 291, 644 P.2d 413 (1982).
3. Market price is measured at the time and place the buyer learned of the breach. In the case of an anticipatory repudiation under 84-2-610, Article 2 is not clear when the buyer learns "of the breach." Courts have adopted a variety of approaches: a buyer learns of the breach when it learns of the repudiation, when the time for performance arrives, or a commercially reasonable time after it learns of the repudiation (see 84-2-610(a)). In Baker v. Ratzlaff, 1 K.A.2d 285, 564 P.2d 153 (1977), the Kansas Court of Appeals followed the first approach and measured market price at the time the buyer learned of the repudiation, albeit without significant discussion of the alternatives.
4. Under subsection (2), the place of determining market price ordinarily is the place of tender, except that in the case of rejection or revocation of acceptance the place of arrival is used to determine the market price. See also 84-2-723 and 84-2-724 (re proof of market price).
5. A buyer that has entered into a contract to resell the goods may nonetheless recover market damages, even if market damages greatly exceed the buyer's loss as a result of the breach. See Tongish v. Thomas, 251 K. 728, 840 P.2d 471 (1992). In Tongish v. Thomas, supra, a Coop Association was allowed to recover market damages of roughly $12 per hundredweight of sunflower seeds, even though its profit (given the resale contract) was only to be a 55 cent per hundredweight handling fee.
Law Review and Bar Journal References:
Extension of time available in action for damages involving "cover price" does not apply where damages are based on difference between contract price and market price, Keith Hey, 7 W.L.J. 35, 40, 41 (1967).
"Executory Contracts and Bankruptcy: The Case for a Federal Common Law," Richard F. Broude, 17 K.L.R. 1, 16 (1968).
Discussed in note concerning the uniform commercial code, the statute of frauds, and the farmer, 25 K.L.R. 318, 319 (1977).
CASE ANNOTATIONS
1. Applied; incidental and consequential damages allowed in action for recision of portion of contract upheld. La Villa Fair v. Lewis Carpet Mills, Inc., 219 Kan. 395, 404, 405, 548 P.2d 825.
2. Section applied; measure of damages properly applied. Baker v. Ratzlaff, 1 Kan. App. 2d 285, 290, 564 P.2d 153.
3. Breach of contract for sale of hay; where no attempt made to cover, measure of damages is difference between market price at time buyer learned of breach and contract price. Panhandle Agri-Service, Inc. v. Becker, 231 Kan. 291, 298, 644 P.2d 413 (1982).
4. Specific damage remedy provisions herein prevail over general provisions in K.S.A. 84-1-106 when seller breaches contract for sale of goods. Tongish v. Thomas, 16 Kan. App. 2d 809, 813, 829 P.2d 916 (1992); Aff'd. 251 Kan. 728, 735, 840 P.2d 471 (1992).
5. Holding that exact time of contract breach was jury question did not reopen contract breach issue. McRae v. Publications Intern., Ltd., 985 F. Supp. 1036, 1040 (1997).