Neri v. Retail Marine Corp. – Case Brief

Neri v. Retail Marine Corp., 30 N.Y.2d 393, 334 N.Y.S.2d 165 (N.Y. 1972).

Facts: Neri (P) paid a $4,250 deposit on the purchase of a $12,600 boat from Retail Marine (D). Neri repudiated the sale one week later due to an upcoming operation. Neri requested a refund of his deposit and D refused because the boat had already been delivered from the factory. P sued to recover his deposit and D filed a counterclaim for $4,250 for lost profits and expenses. D sold the boat four months later to a different customer for the same price.

D proved that its expenses and expected profit was $3,250. The trial court entered summary judgment to P minus $500 pursuant to UCC 20718 and D appealed.

Issue: Can a volume retail seller of standard priced goods recover lost profits when a buyer defaults on a sales contract, if market damages are inadequate to put the seller in as good a position as he would have been had the contract been performed?

Holding and Rule: Yes. A volume retail seller of standard priced goods may recover lost profits when a buyer defaults on a purchase if market damages are inadequate to put the seller in as good a position as he would have been had the contract been performed.

Section 2-718 establishes that the buyer’s right to restitution is subject to offset to the extent that the seller establishes a right to recover damages under the provisions of this Article other than subsection (1).

UCC 2-708(2) provides that if UCC 2-708(1) 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, which the seller would have made from full performance plus incidental expenses and damages.

In this case the buyer’s right to restitution and the seller’s rights to offsets under UCC 2-718 were established on the motion for summary judgment. The measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as full performance. Under 2-708 (2) the seller is entitled to its profit including reasonable overhead along with incidental damages, due allowance for costs reasonably incurred and due credit for payments or proceeds of resale. Due credit for payments or proceeds of resale is inapplicable to this retail sales contract as this provision pertains to the privilege of the seller to realize the junk value of the items if it was manifestly useless to complete the operation of manufacture. P is therefore entitled to restitution in the sum of $4,250 less $3,250 for lost profits and incidental expenses.

Disposition: Affirmed and modified.

Hawkins v. McGee


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