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47. If the seller sues the buyer for breach of contract, how much, if anything, should the seller recover as damages?
A seller agreed in writing to specially manufacture a machine for a buyer for $100,000, with payment due on delivery. The seller expected to make a profit of $10,000 on the sale. After the seller had spent $30,000 on production of the machine and before the machine was complete, the buyer repudiated the contract. After the repudiation, the seller reasonably believed that if it completed the manufacture of the machine, it would be able to sell the machine to a third party. The seller completed the machine and sold it to a third party for $92,000.
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B is incorrect. After repudiation by a buyer, the seller has the alternative of finishing the goods for resale. The calculation for damage if the goods are finished is determined by the difference between the contract price and the resale price, not the anticipated amount of profit had the buyer not repudiated.
C is incorrect. After repudiation by a buyer, the seller has the alternative of finishing the goods for resale rather than seeking costs and lost profit. Here, the seller finished the machine and sold it to a third party, in effect reducing his potential damages award.
D is incorrect. Under the UCC, after a buyer repudiates, the seller may proceed in any reasonable manner in the exercise of reasonable commercial judgment including finishing the goods for resale. The UCC and common law differ in their approach to this type of situation because completed goods can be resold to avoid or reduce loss, unlike services.