Question

Buyer B pays $10,000 to New Orleans grain dealer D in exchange for D’s contractual promise to deliver grain to B’s London office on October 1. As a result of signing this contract, B decides not to sign a similar contract with another dealer for $10,500. D contracts with shipping company S to transport the grain. Buyer B signs a contract to resell the grain on arrival in London for $11,000 to another party. B pays $100 in advance (nonrefundable) as docking and unloading fees for the ship’s projected arrival in London. The ship begins to take on water several days out of New Orleans and returns to port. Inspection reveals that the grain is badly damaged by salt water and D sells it as cattle fodder for $500. D conveys the bad news to B in London, who then purchases the same quantity of grain for delivery on October 1 at a price of $12,000.

(1) What would be the value of expectation damages for D’s breach of contract with B?

(2) What would be the value of reliance damages?

(3) What would be the value of restitution damages?

Answer 1

B has paid $10000 to D to fulfil the order. B further sign the contract to sell the product at $11000. However, the order does not get through and D informs that the product is not deliverable and sold at $500.
B buys the product for $12000 from the market

a) The expectation damages consider what is expected in the contract agonist what has been delivered.
The value includes the scenario that the contract is honored and the gains expected after the fulfilling the contract.
B has paid $10000 for delivery but that has not happened. The shipping cost is incurred and the expected value of the resale is $11000.

The expectation damages are $11100

b) The reliance damages are valued using the fact that the party has relied on the contract and breach of contract has done economic loss, The damages must be equal to that economic loss.
B had to pay $12000 to another supplier to fulfil his part of the contract and also incurred $100 shipping cost.

Reliance Damages are $12100

c) The restitution damages will reasonable evaluate the costs incurred by the party but it will also take into account the benefits received by the party.

B had to pay $12000 for the same delivery from other supplier but he was able to fulfil the contract and received the $11000. In this situation, B had to pay $2000 extra so the restitution damages will be $12000.