Anticipatory Repudiation; Demand for Assurances

If a party repudiates a contract before the time for performance, the other party may treat the repudiation as a total breach, seek performance elsewhere, and sue for breach.

Under the UCC, when a party has reasonable grounds for insecurity, he may demand adequate assurances from the other party and suspend his performance until he receives them.

If the nonrepudiating party has not canceled the contract or materially changed position, the repudiating party may retract the repudiation, providing he gives adequate assurances.  The nonrepudiating party then has no right to sue for breach.

Risk of Loss; Rights of Bona Fide Purchasers

The seller shifts the risk of loss to the buyer when he completes his delivery obligation for conforming goods.  If the contract is FOB seller's place of business, the delivery obligation is completed by placing conforming goods on a common carrier with arrangements that they be shipped to the buyer.  If the contract is FOB buyer's place of business, the delivery obligation is completed when the goods are delivered to buyer's place of business; the seller retains the risk of loss during transit.

If the seller ships nonconforming goods on a shipment or a destination contract, she retains the risk of loss until the goods are accepted.

If the buyer rightfully revokes acceptance of the goods, the risk of loss is on the seller to the extent that the goods are not covered by buyer's insurance.

If the buyer breaches or repudiates the contract before the risk of loss passes to him, the risk of loss is on the buyer for a commercially reasonable time to the extent that the loss is not covered by seller's insurance.

Seller's Remedies in the Event of Buyer's Breach

The seller may sell the goods in a commercially reasonable manner and collect the difference between the contract price and the sales price, plus incidental damages.

If the difference between the sales price and the contract price does not reasonably reflect the seller's damage because he has an unlimited supply of the goods, then the measure of damage is the seller's profit, the difference between his production cost for the goods and the contract price.

The seller may sue for the contract price if the goods cannot be sold in the seller's ordinary course of business.

Buyer's Remedies in the Event of Seller's Breach

The buyer may seek specific performance and replevin the goods where they are unique (and in other special circumstances).

The buyer may seek damages - the difference between the market price and the contract price.

The buyer may cover, that is, purchase the goods elsewhere and collect the difference between the cover price and the contract price.

Measure of Damages

The usual contract measure of damages is the amount which will put the nonbreaching party in the position it would have been in had the contract been performed - the amount of unreimbursed money expended on the contract plus the profit which it would have made on the contract.

If expectancy damages are too speculative, the nonbreaching party may seek reliance damages - the amount expended by him to perform the contract.

Consequential Damages; Liquidated Damages; Specific Performance

Consequential damages are limited to those damages which were reasonably foreseeable.

Liquidated damages are only collectible if the liquidated amount is reasonable either with respect to the amount of damages which the parties anticipated at the time of making the contract, or with respect to the actual damages incurred.

Both the buyer and the seller are entitled to sue for specific performance of enforceable land contracts.

Restitution Damages

If a party is prevented from suing on the contract because the contract is unenforceable or because he has breached the contract, he is entitled to collect restitution damages in quantum meruit, measured by the fair value of the benefit conferred on the other party
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