Also known as: proximate damage · proximate cause damages
Written by attorneys — see sources below.
Damages calculated according to the actual loss proximately caused by a breach of warranty. The measure applies when special circumstances demonstrate that the standard difference in value between goods as accepted and goods as warranted fails to capture the buyer's full loss.
Perry Pratt purchased and accepted seeds advertised as fungus resistant. After planting the entire crop, the plants died from the targeted fungus. Market evidence showed the seeds had some residual value for non-agricultural uses, yet the total crop loss exceeded that residual value. The court therefore measured damages by the actual loss from the failed crop rather than the ordinary value differential at acceptance.
Phoenix Technologies bought servers warranted to handle one thousand concurrent users and accepted them after minimal testing. The servers crashed under five hundred users during a product launch, forcing emergency cloud expenditures and lost subscription revenue. Market data established a lower value for five-hundred-user servers at acceptance, but the court applied a different measure because the launch losses constituted the actual proximate harm.
Safety Factors, Inc., a company engaged in renting, repairing, and selling equipment, purchased seven Night Warrior light towers from Federal Signal Corporation for rental and sale. Before the purchase, Safety Factors president Steve Fors discussed the capabilities and features of the new Night Warrior model with Federal Signal representative David Robbins. Fors compared it to the older TPME model that Safety Factors had used successfully. Safety Factors tested the towers through a full field of motion for approximately five minutes without incident before placing them into service. Problems began in late February 1989 during the first rental to Tucci & Sons. These included the restrike problem in which lamps failed to relight after an interruption or shut down once reaching full intensity, and one tower had reversed fuel lines. Safety Factors contacted Federal Signal service manager Herbert Moore, who visited the site and traced the restrike problem to the Lima generator. By May 1989 a local service company retrofitted all seven towers with a voltage regulator device at no cost. After the restrike fix, excessive oil leakage from the diesel motors caused repeated shutdowns because vibration loosened the bolts securing the crankcase to the generator mount. All Power, the authorized service agent for engine manufacturer Hatz, accepted units for repair beginning in October, but the repairs proved unsuccessful after nine to twelve months of attempts. By the end of July 1991, Hallett had made this repair to every tower. Additional problems occurred from the outset of use. The electric winches failed to raise and lower the lights reliably. They were not watertight. They had underpowered motors whose gears stripped under binding. Ignitions mounted on the generator vibrated apart. Short exhaust pipes rusted out and fell off. The long loose main power cable was easily pinched when lowered in the dark. Federal Signal sued Safety Factors to recover the purchase price of the towers and other items. Safety Factors counterclaimed for breach of warranty and damages. Following a bench trial the court entered judgment for Federal Signal in the amount of $74,446.64 after allowing limited repair credits. The Court of Appeals certified the case to the Washington Supreme Court on October 12, 1993.
View caseThe exception applies when facts show that the ordinary difference between the value of goods as accepted and their value as warranted does not capture the buyer's actual loss. Courts examine whether the breach produced harms that were not reflected in market value at acceptance, such as total crop failure or launch-related expenses that flowed directly from the defect.
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No. Acceptance fixes the time and place for the default measure but does not bar an alternative calculation when special circumstances demonstrate that the actual loss proximately caused by the breach differs from that measure. The buyer must still notify the seller of the nonconformity.
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The buyer must establish a reasonable basis for the claimed loss and show that the harm resulted directly from the breach rather than from independent factors. Evidence of the seller's knowledge of the intended use and the chain of causation from the defect to the actual injury supports the exception.
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No. Proximate damages under subsection (2) replace the standard value-difference measure when special circumstances exist. Consequential damages under subsection (3) may be recovered in addition to either measure when they are foreseeable and a proper case is shown.
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…value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. (3) In a proper case any incidental and consequential damages under § 57A-2-715 may also be recovered. Truck’s Diminution in Value Ample special circumstances…