Also known as: proximate damage · proximate cause damages
Written by attorneys · grounded in primary & secondary sources — see 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.
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The 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…