Also known as: reasonable charge · reasonable rates
Written by attorneys · grounded in primary & secondary sources — see below
Commercially reasonable fees or expenses incurred by an aggrieved seller or buyer in connection with remedying a breach of a sale-of-goods contract. These charges arise from actions such as stopping delivery, caring for goods, effecting cover, or arranging resale after the breach occurs.
Raven Logistics contracted to sell steel beams to Riverfront Developments. When Riverfront wrongfully refused delivery at the port, Raven paid daily demurrage fees while the beams remained unclaimed and hired a broker to arrange a prompt resale. Raven later sued Riverfront to recover those outlays in addition to its direct damages for nonacceptance.
Redwood Bank ordered specialized equipment from Radiance Media. When Radiance failed to deliver, Redwood located substitute goods from another supplier and paid inspection and transportation costs to verify the replacements. Redwood then sued Radiance to recover those expenses as part of its damages claim.
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The seller must show that the charges were commercially reasonable and arose directly from the buyer's breach, such as costs of stopping delivery, caring for the goods, or reselling them. Courts examine whether the expenses were incurred in good faith to mitigate the effects of the breach.
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Yes. The buyer may recover any commercially reasonable charges, expenses, or commissions incurred in connection with effecting cover, along with other reasonable expenses incident to the breach.
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Courts assess whether the amounts align with prevailing market rates for similar services and whether the seller or buyer acted promptly and in good faith to minimize further loss. Charges that exceed ordinary industry costs without justification are typically disallowed.
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Storage fees incurred immediately after repudiation qualify when they are necessary to preserve the goods. Prolonged storage resulting from the seller's own delay in seeking a new buyer may be denied if the additional expense is not commercially reasonable.
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