Part 4- Sales, Chapter 22: Remedies for Breach of Sales Contracts, Doc 4 | Summary - Edubirdie

University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
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219

Pages:

2
Author:

bratrochanter

Measure of Damages for a Breach by the Bridal Shop In the hypothetical case where the Bridal Shop breaches the contract by failing to deliver the custom-designed bridal gown in time for the wedding, the buyer (Kathy) can claim various damages under the UCC. Here’s how damages could be calculated and what types of damages may apply: 1. Compensatory Damages: The Cost of Cover If Kathy covers by purchasing a substitute gown from another shop:  Measure of Damages: Kathy can recover the difference between the contract price for the original gown and the cover price she paid for the substitute gown [UCC 2-712]. o Example: If Kathy's original gown was priced at $2,500 and she had to pay $3,000 for a substitute gown, she could recover $500 in cover damages. 2. Incidental Damages Incidental damages include expenses incurred as a direct result of the breach. These may include:    Additional costs for expedited shipping of the substitute gown if time is critical. Alteration costs if the new gown requires significant adjustments. Costs of transportation to visit multiple bridal shops or a personal shopper fee to find a replacement gown quickly. 3. Consequential Damages Consequential damages are indirect losses that result from the seller's breach, provided the seller knew or should have known about the buyer’s particular needs:    Emotional distress costs (if applicable): If the failure to deliver the gown leads to significant emotional distress tied to the wedding. Costs of wedding rescheduling: If Kathy needs to change the wedding date due to the unavailability of a proper dress. Lost deposits or penalties: If the breach forces Kathy to cancel or modify other wedding services (e.g., venue deposits, photography, etc.). Scenario Analysis: Cover Damages Example: Kathy finds another gown for $3,200. The Bridal Shop’s contract price was $2,500. She is entitled to:  $700 in cover damages ($3,200 - $2,500). Incidental Damages Example: Kathy pays $100 for expedited shipping and $150 for last-minute alterations:  Incidental damages total: $250. Consequential Damages Example: Kathy incurs a $1,000 penalty for rescheduling her venue, as the substitute gown arrives too late:  Consequential damages total: $1,000. Total Damages: Adding all types of damages:     Cover Damages: $700 Incidental Damages: $250 Consequential Damages: $1,000 Total: $1,950

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