R.E. Davis Chemical Corp. v. Diasonics, Inc.

Defendant contracts to purchase MRI unit from Plaintiff. Defendant pays down payment, but then breaches. Plaintiff sells the unit to another party. Defendant sues to recover down payment. Plaintiff sues to recover lost profits.

UCC 2-718(2)(b) would allow Defendant to recover the down payment less $500, but Plaintiff also has an action for damages and that down payment may be offset by Plaintiff's damages. UCC 2-708(2) allows Plaintiff to recover lost profits if Plaintiff can prove that it is a lost volume seller. In order to prove that it is a lost volume seller, Plaintiff must establish that: it would have had the capacity to make both units, and it would have been profitable to make both units. In sum, Plaintiff must prove that had Defendant not breached, it still would have manufactured and sold the second unit.

Remedies for Breach | Measuring Expectation