Bush v. Canfield

Court of Errors of New York · Contracts

ContractsDamagesBreach of contractexpectation damagesnondeliverygoodstime and place of deliveryinterest

Facts

The defendants contracted to deliver 2,000 barrels of flour to the plaintiffs at New Orleans. The plaintiffs advanced $5,000 toward the purchase price, but the defendants failed to deliver the flour. The question was how to measure damages when part of the purchase money had been paid in advance. The defendants argued in substance that any loss the plaintiffs would have suffered had the contract been performed should reduce recovery.

Issue

When a seller contracts to deliver goods, receives part of the purchase money in advance, and then fails to deliver the goods, what is the proper measure of damages? Specifically, may the seller reduce the buyer's recovery by arguing that the buyer would have lost money had the contract been performed, or by apportioning the advance to a reduced value of part of the goods?

Rule

For breach of a contract to deliver an article other than money, damages are generally the value of the article at the time and place of delivery, plus interest for the delay; remote disappointment and loss are not considered. Where the buyer has advanced part of the purchase money on an entire contract for delivery of goods and the seller fails to deliver, the seller must refund the money advanced, and the recovery is not reduced by speculation that performance would have produced a loss or by apportioning the advance to part of the goods.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lena Ortiz agreed to buy 800 sacks of rice from Harbor Crest Milling Co., a fictional grain dealer, for delivery in Savannah, Georgia on September 1. She paid nothing in advance. On September 1, the seller delivered nothing, and the market price of the rice in Savannah was substantially higher than the contract price.

What is Lena's best measure of damages under the governing rule?

Explanation. When a party contracts to deliver an article other than money and fails to do so, the ordinary measure is the value of the article at the time and place of delivery, plus interest for the delay. Because Lena paid nothing in advance, there is no advance to refund. The majority also rejects recovery based on remote disappointment or consequential loss such as separate resale profits. (Derived from Bush v. Canfield (n.d.).)