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Law School Case Brief

Manouchehri v. Heim - 1997-NMCA-052, 123 N.M. 439, 941 P.2d 978

Rule:

N.M. Stat. Ann. § 55-2-714 states that the measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. In a proper case any incidental and consequential damages under the next section may also be recovered.

Facts:

On December 9, 1991, Dr. A. H. Manouchehri purchased a used x-ray machine from Jeff Heim. He paid with a check for $ 1900 on which he wrote at the top "guaranteed to work (install Continental 100-100 x-ray) without limitation" and wrote on the memo line "purchase and installation of Continental 100-100 x-ray." Heim signed his name on the front of the check after Manouchehri read the notations to him. During the following weeks, Manouchehri realized that the machine was performing as a 100/60 machine, when he wanted to purchase a 100/100 machine. Manouchehri notified Heim and asked him to repair it, offering to pay half the repair costs. Although Heim sent someone to inspect the machine, no repairs were made. Consequently, Manouchehri filed a complaint against Heim for breach of warranty. The trial court found in favor of Manouchehri, and the latter was awarded $4400 in damages after a bench trial. Heim challenged the decision, claiming that direct damages based on the cost of repair should not have been awarded because there was no evidence of such cost. Moreover, Heim alleged that consequential damages should not have been awarded because Manouchehri could have avoided them by obtaining a replacement machine; they were not foreseeable, and they were not proved with the required certainty.

Issue:

  1. Was the computation of direct damages proper?
  2. Was it correct to award the buyer consequential damages for the alleged breach of warranty by the seller? 

Answer:

1) Yes. 2) Yes.

Conclusion:

The court affirmed the award of direct damages because the record indicated that the trial court computed the direct damages on a proper ground even though the judgment did not state that ground. The court concluded that it was proper to calculate the direct damages as the difference between the value of the x-ray machine as warranted and the value of the machine actually delivered to the buyer. The court also affirmed the award of consequential damages, concluding that it was rational for the trial court to find that by the time the buyer should have stopped relying on the seller's promises, the buyer had lost profits. According to the court, consequential damages resulting from the seller's breach include: any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and injury to person or property proximately resulting from any breach of warranty.

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