Consequential damages include any loss of prospective profits, and incidental damages permit recovery of a buyer's reasonable expenses incurred in handling the defective goods. Consequential damages are those that cannot be reasonably prevented and arise naturally from the breach, or which are reasonably contemplated by the parties.
Plaintiff seller appealed a decision of the Superior Court in favor of defendant buyer. The seller claimed breach of contract and the buyer counterclaimed for damages from receiving wine that was unmerchantable due to the presence of Fresno mold, and for loss of good will. The seller brought suit to be paid and the buyer successfully counterclaimed.
Is wine found to contain Fresno mold suited for ordinary use?
The court on appeal found that the wine was not suited for its ordinary uses and that the buyer had given sufficient notice, both orally and in writing that it had revoked its acceptance of the wine. The court further held that the trial court properly awarded the buyer its lost profits, minus the cost of the wine, although it had never paid the seller. The court found that the buyer was properly awarded loss of good will after it was forced to liquidate its entire business. The court so held because such consequential damages arose naturally from the breach by the seller.
The court affirmed the judgment in favor of the buyer.