Solved: Discuss the UCC rules on the limitation of damages in a contract

The UCC rules on the limitation of damages in a contract when-

The seller breaches the contract- “Under UCC 2-712 he may recover as damages the difference between the cost of goods in substitution for those due from the seller and the contract price together with incidental or consequential damages or under UCC 2-713 he may have damages measured by the difference between the market price at the time of the breach and the contract price together with any incidental or consequential damages. The Code remedy of “cover” gives the buyer the right to recover the cost of a good faith purchase of substitute goods made without unreasonable delay. (UCC 2-712(1)(2)) The Code permits recovery of lost profits as consequential damages. (UCC 2-715) UCC 2-715(2)(a) bars consequential damages where the loss could have been avoided by “cover.” ”

Breach by the buyer- “Article 2 of the UCC contains four provisions that concern the recovery of a seller’s general damages (as opposed to its incidental or consequential damages): 2-706 (contract price less resale price); 2-708(1) (contract price less market price); 2-708(2) (profit); and 2-709 (price). UCC 2- 708(1) provides for a measure of damages calculated by subtracting the market price at the time and place for tender from the contract price. If the goods have been resold, the seller can sue to recover damages measured by the difference between the contract price and the resale price under 2-706.”