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A covering buyer's damages are equal to the difference between the presumably higher cost of cover and the contract price, plus incidental or consequential damages suffered on account of the breach, less expenses saved.
Appellant Fertico Belgium S. A. and respondent Phosphate Chemicals Export Association, Inc. entered into a contract for the shipment of fertilizer. The contract provided that the shipment was to be received by respondent on two different dates. Subsequently, respondent breached the contract by shipping the first installment of the fertilizer well after the date provided for in the contract. Thus, appellant was forced to find another shipper to provide the fertilizer, and to find another customer for the fertilizer shipped by respondent. Appellant filed suit for breach of contract under the Uniform Commercial Code (UCC). The trial court found for appellant, and the lower appellate court vacated the award of damages to appellant. Appellant sought review of the judgment.
Under the circumstances, was the appellant entitled to damages?
The court reversed the vacating of the damages award, holding that under the UCC appellant was entitled to damages because its cover purchase was made in good faith and without unreasonable delay, and the fertilizer obtained from the second shipper was a reasonable substitute, as appellant had contracted to sell fertilizer. The action of selling the shipment of respondent's fertilizer to a third party after respondent's breach did not offset appellant's damages for the breach.