Also known as: UCC 2-715 · § 2-715 · 2-715 · buyer's incidental and consequential damages
Written by attorneys · grounded in primary & secondary sources — see below
A statutory rule authorizing a buyer in a contract for the sale of goods to recover incidental damages incurred in connection with a seller's breach and consequential damages resulting from the buyer's particular requirements of which the seller had reason to know at the time of contracting, provided the losses could not reasonably be prevented by cover or otherwise.
Ultimate Solutions contracted to buy specialized servers from Unity Capital for immediate deployment in a time-sensitive project. After Unity Capital breached by failing to deliver, Ultimate Solutions purchased substitute servers from another vendor at a higher price. Ultimate Solutions then recovered the price differential plus extra shipping costs incurred because the breach forced expedited delivery to meet the project deadline.
Umar Usmani agreed to purchase perishable produce from Ulysses Maritime at a fixed price for resale to grocery chains. When Ulysses Maritime repudiated, Umar Usmani measured damages using the market price on the date he learned of the breach and added storage fees and lost profits on the resale contracts that Ulysses Maritime knew about at contracting.
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Usha Upton purchased a vehicle from a dealer that later rolled over due to a design defect. Usha Upton recovered medical expenses and lost wages as consequential damages because the seller had reason to know the vehicle would be used for ordinary driving and the injury resulted directly from the breach of warranty.
Uri Underwood bought cigarettes from a retailer and suffered lung disease after years of use. Uri Underwood recovered medical costs and related expenses as consequential damages because the manufacturer had reason to know of the health risks at the time of sale and the losses flowed from the breach of warranty.
The buyer must show that the seller had reason to know of the buyer's particular requirements at contracting and that the losses could not reasonably have been prevented by cover or otherwise. Foreseeability is judged from the seller's perspective at the time of contracting.
Supporting sources
No. UCC § 2-712(3) expressly states that failure to effect cover does not bar any other remedy, including consequential damages under § 2-715. A buyer may still recover losses that were foreseeable and unavoidable even without making a substitute purchase.
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Yes, when the seller had reason to know at contracting that the buyer would resell the goods and that breach would cause the buyer to lose profits on those resale contracts. The losses must also be ones the buyer could not reasonably avoid.
Supporting sources
…now in issue. [^maj-2]: Indeed, the statutory provision for personal injury recovery as an element of "consequential damages" (UCC 2-715 [2] [b]) makes it illogical to conclude, as the amicus Product Liability Advisory Council suggests, that the breach of implied warranty theory should be confined to recovery for economic…