Neri v. Retail Marine Corp.
Citation: 30 N.Y.2d 393 (1972)
Facts
Neri contracted to buy a boat from Retail Marine for 4,250. Before delivery, Neri cancelled the contract (due to illness). Retail Marine resold the boat to another buyer at the same price. Neri demanded return of his deposit. Retail Marine sought to retain the full deposit as damages, arguing it lost profits as a volume seller.
Issue
What damages is a volume seller entitled to recover when a buyer breaches a contract for the sale of goods?
Holding
Retail Marine was entitled to retain lost profits plus incidental damages. As a volume seller (a dealer with an unlimited supply of boats), it lost the profit from one sale even though it resold at the same price. The contract-resale price differential method is inadequate for volume sellers.
Rule
Lost profits for volume sellers (UCC § 2-708(2)): When a seller has an unlimited supply and resells the breached goods at the same price, the contract-resale differential is zero — an inadequate measure. A volume seller is entitled to recover the profit (including reasonable overhead) it would have made on the original sale, because it could have made both sales. The resale does not mitigate the lost profit on the original transaction.
Significance
- Leading case on UCC § 2-708(2) lost profits remedy for volume sellers
- The contract-market differential (§ 2-708(1)) is inadequate for volume sellers; § 2-708(2) allows lost profits
- Critical insight: a dealer with an unlimited supply loses a sale every time a buyer breaches, because the dealer could have made both the original and the resale
- Neri was entitled to return of the deposit minus the $2,579 in lost profits and incidental damages