Teradyne, Inc. v. Teledyne Industries, Inc.

676 F.2d 865 (1st Cir. 1982)

 

RULE:

Mass. Gen. Laws ch. 106, § 2-708(2) applies only if the damages provided by § 2-708(1) are inadequate to put the seller in as good a position as performance would have done. Under § 2-708(1) the measure of damages is the difference between unpaid contract price and market price.

FACTS:

Appellee seller sued appellant buyer for damages suffered from the breaking of a sales contract. The district court referred the case to a master. Later, the district court granted appellee’s motion to adopt the master's report allowing it to recover certain damages but denied its motion to require appellant to pay all the master's costs. Appellant sought review of the district court’s judgment. The court vacated the district court’s judgment and remanded the case so that with respect to the omitted direct labor costs the parties could offer further evidence and the court could make findings with whatever definiteness and accuracy the facts permit.

ISSUE:

Was appellee seller entitled to recover from appellant buyer what Mass. Gen. Laws ch. 106, § 2-708(2) called its expected profit, including reasonable overhead on the broken contract?

ANSWER:

Yes.

CONCLUSION:

A literal reading of the last sentence of § 2-708(2), providing for "due credit for payments or proceeds of resale", would indicate that appellee recovered nothing because the proceeds of the resale exceeded the price set in the contract. However, in light of the statutory history of the subsection, it was universally agreed that in a case where after the buyer's default a seller resells the goods, the proceeds of the resale were not to be credited to the buyer if the seller was a lost volume seller, that is, one who had there been no breach by the buyer, could and would have had the benefit of both the original contract and the resale contract. Thus, despite the resale of the goods, appellee was entitled to recover from appellant what § 2-708(2) called its expected "profit (including reasonable overhead)" on the broken contract.

Click here to view the full text case and earn your Daily Research Points.