UCC Remedies: The Toolkits When a Goods Deal Breaks

⚡ 10-Second Rule

When a goods deal breaks, buyer and seller each get tools to collect the deal's promised value.

🧒 ELI-10 Scene

Mia orders ten pies from baker Sol at $10 each for her party. Sol bails. Mia buys replacement pies from another stand at $12 each. Sol owes her the $2 gap on every pie. Now flip it: Mia cancels the order. Sol resells her pies to a stranger for $8 each. Mia owes Sol the $2 gap. One more twist: Sol can bake endless pies. Reselling didn't replace Mia's order — Sol still lost one whole sale's profit.

⚖️ Actual Rule

Buyer's remedies: after a seller's breach, the buyer may "cover" under UCC § 2-712 by purchasing substitute goods in good faith and without unreasonable delay, recovering the difference between the cover price and the contract price, plus incidental and consequential damages, less expenses saved. A buyer who does not cover recovers under § 2-713 the difference between the market price at the time the buyer learned of the breach and the contract price. A buyer who accepts nonconforming goods recovers for breach of warranty under § 2-714(2) "the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted," and may obtain specific performance for unique goods under § 2-716. Before acceptance, § 2-601's perfect tender rule permits rejection if the goods or the tender of delivery "fail in any respect to conform to the contract"; after acceptance, § 2-608 permits revocation of acceptance only for a nonconformity that substantially impairs the goods' value to the buyer, where the buyer accepted on the reasonable assumption the defect would be cured or without discovering a defect that was hard to detect, and revocation must occur within a reasonable time after the buyer discovers or should have discovered the ground for it.

Seller's remedies: after a buyer's breach, the seller may resell the goods under § 2-706 in good faith and in a commercially reasonable manner and recover the difference between the contract price and the resale price, or recover under § 2-708(1) the difference between the contract price and the market price at the time and place for tender. If those measures are inadequate to put the seller in as good a position as performance would have — the classic lost-volume seller with supply exceeding demand — § 2-708(2) awards the profit, including reasonable overhead, the seller would have made from full performance. The seller may sue for the full price under § 2-709 only for goods the buyer accepted, conforming goods lost or damaged after risk of loss passed to the buyer, or goods the seller cannot reasonably resell.

ELI-10 translation: each side collects the gap between the promised deal and reality, plus a whole lost profit when reselling replaced nothing.

🔍 Ask These Questions

1. Who broke the deal — seller or buyer? (Pick the right toolkit first.)
2. Is the buyer holding bad goods — reject or revoke? (Before keeping them, any defect lets you reject; after, only a big one.)
3. Did the buyer cover? (Replacement price minus contract price is the cleanest measure.)
4. No cover? Use the market gap. (Market price when the buyer learned of the breach, minus the deal price.)
5. Did the buyer keep defective goods? Use the warranty gap. (Value as promised minus value as delivered.)
6. Is the seller reselling — and could it have made both sales? (An endless-supply seller collects the whole lost profit.)
7. Does the seller want the full price? (Only for kept goods, goods wrecked after risk passed, or unsellable goods.)

⚠️ Bar Trap

Exam language: The lost-volume seller: examiners show a dealer reselling the identical goods at the identical price and bait you into awarding zero or nominal damages. Where the seller had the supply and capacity to make both sales, § 2-708(2) awards the lost profit on the broken sale, because the resale buyer would have bought anyway and the resale therefore replaced nothing.

ELI-10: If the seller could have sold to both customers, the second sale doesn't erase the first. The breaker still owes one whole sale's profit.

🧪 Question

A boat dealer with an ample supply of a popular new model contracted to sell one to a customer for $40,000. The dealer acquires each such boat from the manufacturer for $32,000 and can obtain as many as it can sell. The customer repudiated the contract before delivery. One week later, the dealer sold an identical boat from its inventory to a different customer for $40,000. The dealer then sued the repudiating customer for damages.

What should the dealer recover?

(A) Nothing beyond nominal damages, because the resale left the dealer with no loss. (B) $8,000, because the dealer would have earned profits on both sales but for the repudiation. (C) $40,000, because a buyer who repudiates is liable for the full contract price. (D) The difference between the contract price and the market price, which on these facts is zero.

Answer: (B). The dealer is a lost-volume seller: with unlimited supply, the second buyer would have bought a boat regardless, so the resale and market measures leave the dealer short, and § 2-708(2) awards the $8,000 profit lost on the repudiated sale.

💡 Why the Wrong Answers Are Wrong

• (A) treats the resale as a substitute; a lost-volume seller's resale replaces nothing, so one full sale's profit vanished.
• (C) misuses the price action, which § 2-709 reserves for accepted goods, goods wrecked after risk passed, or unsellable goods.
• (D) stops at § 2-708(1) even though that measure yields to lost profit when it fails to make the seller whole.
• ELI-10: The misconception is counting boats instead of sales. The dealer got one sale back but still lost the other.