26. In an action by the manufacturer against the buyer for breach of contract, which of the following is NOT a proper measure of the manufacturer's damages?

A is correct. The manufacturer does not have an action for the price. Such an action is available under three circumstances, none of which are present: (1) where the buyer has accepted the goods; (2) where the goods are lost or damaged within a commercially reasonable time after the risk of loss has passed to the buyer; or (3) where the buyer has returned or rejected the goods and the seller is unable after reasonable efforts to resell the goods. UCC § 2-709. Here, (1) the buyer rejected the machine because he no longer needed it, (2) the machine was returned to the manufacturer and no facts suggest it was damaged, and (3) the facts suggest the manufacturer would not struggle to resell the goods because the manufacturer sold many such machines each year.

B is incorrect. UCC § 2-708(1) gives a seller the right to recover the difference between the contract price and the market price of goods when a buyer has wrongfully rejected the goods. However, the manufacturer would be better off seeking damages under UCC § 2-708(2) because the manufacturer sold many such machines each year, which means the manufacturer is a lost volume seller. Thus, a market differential formula will unlikely result in the recovery of any direct damages by the manufacturer with respect to what appears to be standard goods.

C is incorrect. UCC § 2-706 allows a seller to recover the difference between the contract price and resale price when a buyer has wrongfully rejected the goods. However, as discussed above, the manufacturer would be better off seeking damages under UCC § 2-708(2), because similar to above, the manufacturer sold many such machines each year, which means the manufacturer is a lost volume seller. Thus, it is unlikely that a resale would result in the recovery of any direct damages by the manufacturer with respect to what appears to be standard goods.

D is incorrect. UCC § 2-708(2) provides that a lost volume seller can recover any lost profits if the difference between the market price at the time and place for tender and the unpaid contract price will not adequately compensate the manufacturer for its actual damages. A lost volume seller is usually not operating at full capacity, which means the seller likely has an inventory of goods available for sale to multiple buyers. Here, because the manufacturer sold many such machines each year, even though the manufacturer could resell the machine that buyer rejected and returned, the manufacturer could have made two sales if the buyer fully performed the terms of the contract.