What legal result?

[DrWho]

$40 (the return shipping)

ABC has seen no loss on the 100 widgets they sent because they normally stock 2,000 widgets and they also still have the 100 widgets in their possession. In other words, the only losses incurred were with the shipping. The only gray area is the $40 for the first shipping of the product. ABC said they would cover that cost, but arguably said so assuming they would have made profit if the contract was upheld. ABC would have to prove that this shipping cost was a loss directly associated with the breach of contract. The problem in my opinion isn't worded well enough to determine which way this grey area should swing (which is why an actual contract between ABC and XYZ should be presented instead of a narrated summary of the contract).

The only additional amount they could sue for would be any other losses incurred by the breach of contract. For instance: restocking fees, or the costs associated with a special order. I take it from the way the problem is stated that this is not a special order, and the restocking fees were not mentioned. If ABC is only able to hold 2000 in their inventory and 100 more units were made during the shipping time of the order, then XYZ will be responsible for the costs of stocking 100 more widgets. I can think of many more scenarios, but since they weren't stated in the problem I would assume their costs are negligible at best.

Everything involving the purchase from P Corp. later in time is completely irrelevant. The amount ABC could sue for within those 20 days (before the P Corp. purchase) should be the same as the amount after 20 days (after the P Corp. purchase).

So it's either $40 or $80 + restocking fees (of which none were mentioned) - aka, only the losses ABC incurred as a result of XYZ breaching the contract.

[pauln]

No, ABC HAS incurred a loss. It lost the benefit of the properly executed contract (the sale). The whole purpose of contracts is to ensure performance and allow a means (legal) to enforce it.

To think that setting everything and everybody back to the conditions prior to the signing of the contract is justice makes no sense - contracts are enforcable because not doing so is an injustice.

The logic of contract enforcement implies that the contract in force (the relative status quo) is the state from which to make a determination of who is injured or suffering a loss.

[3dzapper]

Looks like punitive damages aren't allowed under Nevada law.

How about this scenereo: ABC recieves the 100 widgets back at it's dock. But, in the interum had replaced the 100 widgets with fresh stock, these returned widgets are now overstock and reduced in value as scrap surplus. ABC sells the overstock items to Joe's Job Lot for $10?

My reading of Chris' link says XYZ pays the difference plus return shipping and handling plus Chris' firm's hourly rate and expenses.

[DrWho]

No, ABC HAS incurred a loss. It lost the benefit of the properly executed contract (the sale). The whole purpose of contracts is to ensure performance and allow a means (legal) to enforce it.

To think that setting everything and everybody back to the conditions prior to the signing of the contract is justice makes no sense - contracts are enforcable because not doing so is an injustice.

The logic of contract enforcement implies that the contract in force (the relative status quo) is the state from which to make a determination of who is injured or suffering a loss.

Then following that logic, XYZ should be forced to receive the shipment of items at the conclusion of the court case...but they're already gone. The contract protects both parties - you can't charge XYZ without them getting the product (they lost out too).

[Jeff Matthews]

Okay, here it is. Some answers figured the profit opportunity twice, but did not expressly state this. Ray actually did when he stated that had XYZ honored the contract, the widegts that P Corp would have bought would have been other widgets from ABC. ABC is known as a "lost volume seller."

So, P Corp's purchase should not be used to offset the damages caused by XYZ's breach because that would rob ABC of the profit it would have made on P Corp's separate purchase.

Damages are $400. ABC agreed to pay freight to XYZ included in the $1000 contract price. Cost of goods sold is $600. Profit is $400, less the $40 shipping, or $360. That is the profit ABC would have made on the sale to XYZ.

XYZ breached. Because of that, ABC had to incur return freight charges of $40. So, add the $40 return freight to the $360 profit, and damages are $400.

P Corp's purchase should not factor in because ABC would have sold an additional 100 widgets to P Corp with an all new profit.

Those who thought the contract price ($1000) is damages (or $1000, plus freight) would not be right because the proper measure is the "benefit of the bargain" measure. What was the benefit of the bargain to ABC? It would have been a profit of $360. The $40 additional return freight incurred by ABC is known as "consequential damages." Consequential damages are those damages that do not come from the contract terms but reasonably are foreseeable to be expected as a result of the breach.

Had the facts been different, and ABC was going out of the widget business and selling its last 100 widgets, it would not have been a lost volume seller. In that case, it only had $100 widgets to sell, and the profit made on P Corp's purchase would be offset against the $400 damages caused to ABC.

[tigerwoodKhorns]

No, ABC HAS incurred a loss. It lost the benefit of the properly executed contract (the sale). The whole purpose of contracts is to ensure performance and allow a means (legal) to enforce it.

To think that setting everything and everybody back to the conditions prior to the signing of the contract is justice makes no sense - contracts are enforcable because not doing so is an injustice.

The logic of contract enforcement implies that the contract in force (the relative status quo) is the state from which to make a determination of who is injured or suffering a loss.

Hmmm. Intertesting...

[Jeff Matthews]

... and well put.

[tigerwoodKhorns]

... and well put.

Yea, since you spilled the beans I can say it. I really like Paul and Rick (3d's) answers.

[tigerwoodKhorns]

Here's a real world one.

Buyer has entered into a contract to buy a house from Seller and has a $5,000 earnest money deposit in esrow. Buyer discovers a Lis Pendens (notice of a lawsuit) on title. Buyer goes to the house and there is someone (not the Seller) living in the house. The contractual price for the house is $15,000 below market value ($425,000 vs $440,000 market value). The Las Vegas real estate market is level and/or declining. They want to move into the house because they like it.

What do I advise Buyer?

[Jeff Matthews]

I'll sit back and watch this one play out. Er...... ummm...... Ask the County Clerk to allow you to inspect the Lis Pendens in the deed records. When you get the applicable deed book, rip out the pages and insert some irrelevant, fake document with the same page numbers, so nobody will know anything is missing.

[tigerwoodKhorns]

I'll sit back and watch this one play out. Er...... ummm...... Ask the County Clerk to allow you to inspect the Lis Pendens in the deed records. When you get the applicable deed book, rip out the pages and insert some irrelevant, fake document with the same page numbers, so nobody will know anything is missing.

That's actually really good advice.

But here is the thing, what do you advise this person in a real world situation? Anyone? How about the non-lawyers?

[sputnik]

What do I advise Buyer?

Tell them to get mold and asbestos inspections of the home (consider a meth inspection too). Just to add more complication.

[mungkiman]

If XYZ is on the hook for return shipping, why aren't they also on the hook for the contractual shipping?

$400 is the contractual damage, but believe awarded damages would include return shipping for a total of $440.

If
the product profit was $20, and the shipping (each way) was $1000,
would the seller only be entitled to $1020? Damages aren't even close
to being covered in this example, but the premise is the same.

[Jeff Matthews]

If XYZ is on the hook for return shipping, why aren't they also on the hook for the contractual shipping?

$400 is the contractual damage, but believe awarded damages would include return shipping for a total of $440.

If the product profit was $20, and the shipping (each way) was $1000, would the seller only be entitled to $1020? Damages aren't even close to being covered in this example, but the premise is the same.

I know, Mungki, you were sooooo close! The answer is because in giving the seller the full benefit of the bargain, seller would have eaten the $40 shipping to XYZ. That, of course, is not the case with the return shipping because the contract did not contemplate that ABC would eat any return shipping due to a breach by XYZ. The idea is to see what would ABC's profits have been had XYZ honored the deal.

Now, on to Chris's problem with the contract to buy a home. By the way, if anyone thinks screwball messes like Chris's are rare, they happen all the time - just in slightly different ways. So, what do you all think? These folks are ready to get a good deal on a house, and this comes up.....

[tigerwoodKhorns]

Now, on to Chris's problem with the contract to buy a home. By the way, if anyone thinks screwball messes like Chris's are rare, they happen all the time - just in slightly different ways. So, what do you all think? These folks are ready to get a good deal on a house, and this comes up.....

You have to think outside of the box. What do you tell them?

[Arky]

Here's a real world one.

Buyer has entered into a contract to buy a house from Seller and has a $5,000 earnest money deposit in esrow. Buyer discovers a Lis Pendens (notice of a lawsuit) on title. Buyer goes to the house and there is someone (not the Seller) living in the house. The contractual price for the house is $15,000 below market value ($425,000 vs $440,000 market value). The Las Vegas real estate market is level and/or declining. They want to move into the house because they like it.

What do I advise Buyer?

File a notice to vacate on residing party (assumes no legal right to reside). Seller has to provide clear title so must satisfy Lis Pendens. If unwilling or unable buyer must decide whether to satisfy itself & complete transaction, sue seller for specific performance, or walk away.

[Arky]

I'll sit back and watch this one play out. Er...... ummm...... Ask the County Clerk to allow you to inspect the Lis Pendens in the deed records. When you get the applicable deed book, rip out the pages and insert some irrelevant, fake document with the same page numbers, so nobody will know anything is missing.

That's actually really good advice.

But here is the thing, what do you advise this person in a real world situation? Anyone? How about the non-lawyers?

I don't understand Jeff's comment, unless it was in jest. That action would constitute fraud, right?

[mungkiman]

"The idea is to see what would ABC's profits have been had XYZ honored the deal"

ABC's
profits would have only been $360. Forward shipping is part of the
cost, just like production, and is what the contract included. Return
shipping is not contractual. The only way I can agree with your answer
would be regarding the amount of $400, and only if return shipping
damages wre not awarded.

[SilverSport]

I'll sit back and watch this one play out. Er...... ummm...... Ask the County Clerk to allow you to inspect the Lis Pendens in the deed records. When you get the applicable deed book, rip out the pages and insert some irrelevant, fake document with the same page numbers, so nobody will know anything is missing.

How Sandy Berger-ish...

Bill

[Jeff Matthews]

"The idea is to see what would ABC's profits have been had XYZ honored the deal"

ABC's profits would have only been $360. Forward shipping is part of the cost, just like production, and is what the contract included. Return shipping is not contractual. The only way I can agree with your answer would be regarding the amount of $400, and only if return shipping damages wre not awarded.

On motion for rehearing by the Hon. Mr. Mingkiman on behalf of ABC. After due consideration, the Court finds the judgment in favor of ABC for $400 is well-grounded. It is so ordered.