First Principles of Business Law
Remedies for breach of contract

3. An award of damages

3.5. Types of loss: wasted expenses

 

 

 

Read the facts and the question and then choose the best answer.

A, a cloth manufacturer in Australia, purchases industrial looms for $100,000 from an overseas supplier B. A arranges and pays for the shipping of the looms, insurance while the looms are in transit, factory modifications and installation of the looms. These costs total $10,000. But when tested, the looms prove faulty and not of merchantable quality. A refuses to pay the purchase price and, in addition, claims $10,000 damages from B to compensate for the expenses that A has wasted transporting and installing the looms.  Is A entitled to claim his wasted costs as damages for B's breach?

(a) Yes. If expenses are incurred in expectation of proper performance, and then wasted because of the breach, they can be recovered as damages.

(b) No. Expenses incurred in the execution of a contract are something each party must pay for themselves, even if they turn out to have been wasted.

 

 

 

 

 

 

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