Cow’s Milk Farms needs a certain part for its pasteurizing equipment and enters into a contract to purchase the part from Dairy Supplies Inc., for $3000, with delivery promised on Monday. Cow’s Milk also notifies Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000 in business. If Dairy Supplies ships the part late, and it is not received until Wednesday, Cow’s Milk can likely recover:
a. $3,000 in compensatory damages.
b. $10,000 in consequential damages.
c. $13,000 in compensatory and consequential damages.
d. Less than $3000, because Dairy substantially performed under the contract.
Answer : C. $13,000 in compensatory and consequential damages.
Explanation : As per the UCC 350-53, Cow's Milk Farm is entitled to receive both the compensatory as well as consequential damages as Dairy Supplies failed to deliver the equipment on time which caused consequential loss to another party due to non performance of contract.
Cow’s Milk Farms needs a certain part for its pasteurizing equipment and enters into a contract...