Kenco Homes, Inc. v. Williams

Washington Court of Appeals · 1999 · Contracts

972 P.2d 125 (1999)

Updated July 26, 2026

ContractsUCC seller's remediesDamagesAttorney's feesUCC 2-708seller's damagesnon-acceptancerepudiation

Facts

Kenco, a mobile home seller with a virtually unlimited supply of product, contracted to sell Williams a mobile home not yet ordered from the factory for $39,400, with $500 down. The contract was conditioned on financing and later approval of site improvements; Williams accepted the site-improvement bid and received preliminary financing approval. Before Kenco ordered the home, Williams stopped payment on a $600 appraisal check and repudiated the transaction because he found a better deal elsewhere. After the repudiation, Kenco did not order the mobile home, incurred only minor overhead, and sued for lost profits; the trial court found lost profits of $11,133 but awarded only the down payment.

Issue

When a buyer repudiates before the seller has ordered goods from its supplier, and the seller rightfully elects not to acquire those goods, is the seller limited to the market-price measure in RCW 62A.2-708(1), or may the seller recover lost profits under RCW 62A.2-708(2)? A related issue is which party is entitled to contractual attorney's fees.

Rule

A nonbreaching seller may recover damages for non-acceptance under RCW 62A.2-708. Subsection (1) governs unless it is inadequate to put the seller in as good a position as performance would have done; if inadequate, subsection (2) allows recovery of the profit, including reasonable overhead, that the seller would have made from full performance. The seller seeking subsection (2) damages bears the burden of showing subsection (1)'s inadequacy, which generally depends on whether the seller has a readily available market on which to resell the breached goods. When the seller never acquires the goods because it rightfully elects not to do so after the buyer's breach, the seller cannot resell on the open market, making subsection (1) inadequate and subsection (2) applicable.

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

In Spokane, Cedar Bluff Outfitters agreed to sell Noah Benton a standard prefabricated storage shed for $18,000. The shed had not yet been ordered from Cedar Bluff’s supplier when Noah repudiated, and Cedar Bluff then chose not to place the supplier order.

Which measure of damages is most appropriate for Cedar Bluff to seek?

Explanation. Under the majority rule, subsection (1) applies unless it is inadequate to put the seller in as good a position as performance would have done. When the buyer repudiates before the seller acquires the goods, and the seller rightfully elects not to acquire them, the seller cannot resell those goods on the open market. That makes subsection (1) inadequate, so the seller may recover profit, including reasonable overhead, under subsection (2).