Cover
Before beginning this interactive, read the case on p. 533 in your text. Note that when a seller breaches a contract, depending on the circumstances, the buyer can cancel the contract, obtain cover, sue to recover damages, recover the goods, obtain specific performance, or reject nonconforming goods. In this scenario, you will observe the actions taken by a customer of the fictional J.B. Used Cars after the car dealer breaches its contract.
CONCEPT REVIEW:
As with sellers and lessors, buyers and lessees also have a number of contract remedies under the Uniform Commercial Code (UCC). Like the remedies of sellers, the remedies used by buyers and lessees depend on the circumstances surrounding the breach of contract.
Read the case below and answer the questions that follow.
Imagine that Mark contracts with the fictional J.B. Used Cars to purchase a used 2009 red, automatic Toyota Camry for $14,988 through a special two-day sale. Mark pays in full for the car and is told that the car lot will deliver the Camry to Mark's house free of charge as soon as the transfer of title is cleared. However, the seller begins making excuses and fails to ever deliver the car. Thus, the seller is in breach of contract because Mark already paid for the Camry and never received his vehicle. Mark needs a new car soon, so he decides to obtain cover instead of cancelling the contract with the seller. He searches at other local car dealers and, two days after finding J.B. Used Cars in breach of contract, he finds another Camry that he is satisfied with. It is a 2009 silver Camry that costs $17,982; it is an automatic, and it has roughly the same number of miles as the Camry from J.B. Used Cars. This price is comparable to the standard Blue Book price for a 2009 Camry.
What does it mean to obtain cover after a seller breaches a contract? Why does the buyer in this situation obtain cover?
What are the four criteria that a buyer must meet to obtain cover? In this case, do Mark's actions appear to meet those criteria?
What is the formula used to determine damages in cover cases? How much in damages would Mark be awarded by the courts in this situation?