Article 2 — Sales · Section 2-708
Detailed overview of UCC § 2-708 regarding a seller's damages when the buyer breaches the contract.
Source: U.C.C. § 2-708
If the measure of damages provided in § 2-706 is inadequate to put the seller in as good a position as performance would have done, then the measure of damages is the profit (including reasonable overhead) that the seller would have made from full performance by the buyer, together with any incidental damages allowed under § 2-710, but less expenses saved in consequence of the buyer's breach.
UCC § 2-708 allows a seller to recover lost profits when a buyer breaches a sales contract, if the standard remedy does not adequately compensate the seller. This provision ensures that the seller can claim both profits from the sale and any incidental damages incurred due to the breach.
Expenses incurred by the seller as a result of the buyer's breach, such as costs for storage or resale.
The earnings the seller would have made if the buyer had performed the contract as agreed.
Example 1
A seller contracts to deliver 100 units of a product for $10,000. If the buyer breaches, the seller can claim lost profits if they prove that they would have made $3,000 in profit from the sale.
Example 2
If a seller had to incur an additional $200 in storage costs because the buyer reneged on the contract, they can claim this cost as incidental damages on top of lost profits.