Neri v. Retail Marine Corp.

30 N.Y.2d 393, 334 N.Y.S.2d 165, 285 N.E.2d 311 (1972)

 

RULE:

N.Y. U.C.C. Law § 2-718(2)(a)-(b) provides, among other things, that the buyer, despite his breach, may have restitution of the amount by which his payment exceeds: (a) reasonable liquidated damages stipulated by the contract or (b) absent such stipulation, 20 percent of the value of the buyer's total performance or $ 500, whichever is smaller.

FACTS:

Plaintiffs contracted to purchase a boat from defendant, against which they made a deposit of $ 4,250, but thereafter rescinded the contract and the boat was sold by defendant to another buyer for the same price as that negotiated with plaintiffs. Defendant's profit would have been $ 2,579 and, during the period the boat remained unsold, $ 674 of incidental expenses were incurred. Defendant declined to refund plaintiffs' deposit and an action to recover it was commenced. Defendant counterclaimed, alleging plaintiffs' breach of the contract and defendant's resultant damage in the amount of $ 4,250, for which sum defendant demanded judgment.The trial court awarded defendant a portion of the counterclaim. On appeal, the court affirmed the lower court's order as modified after reassessing the damages under the Uniform Commercial Code and awarding lost profits plus incidental expenses for repudiation of a contract.

ISSUE:

Is the plaintiff, despite breach, entitled to any restitution?

ANSWER:

Yes.

CONCLUSION:

The trial court correctly denied defendant's claim for recovery of attorney's fees incurred by it in this action. Attorney's fees incurred in an action such as this are not in the nature of the protective expenses contemplated by the statute (Uniform Commercial Code, § 1-106subd. [1]§ 2-710§ 2-708, subsection [2]) and by our reference to "legal expense" in Procter & Gamble Distr. Co. v. Lawrence Amer. Field Warehousing Corp. (16 N Y 2d 344, 354-355supra), upon which defendant's reliance is in this respect misplaced. It follows that plaintiffs are entitled to restitution of the sum of $ 4,250 paid by them on account of the contract price less an offset to defendant in the amount of $ 3,253 on account of its lost profit of $ 2,579 and its incidental damages of $ 674.

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