5. At the end of the salmon catching season, one large fishery, Salmons of Seattle, has on hand a great stock of processed frozen salmon and other fish fillets. On August 1 it contracts to sell a large quantity of salmon fillets to Better Foods, a food wholesaler in Boise, Idaho for a price of "$2 per pound F.O.B. Boise." Delivery is to be made by railroad on or before August 21, and payment is to be made within 30 days of the buyers receipt. On August 4, Salmons delivers some crates marked for Better Foods to the railroad with instructions that these be delivered to Boise, where that firm will take delivery. When a representative of Better Foods goes to the Boise railyard on August 21, she quickly discovers that the crates contain not salmon but less valuable haddock fillets. She rejects the shipment. The following prices may (or may not) help you answer the questions.

Market price of fillets at Boise on August 1 $2.04 Market price at Seattle on August 1 $1.97 Market price at Boise on August 4 $2.16 Market price at Seattle on August 4 $2.09 Market price at Boise on August 21 $3.00 Market price at Seattle on August 21 $2.97 Cost of shipping from Seattle to Boise $ .05

b. What would Better Foods be awarded if instead the price had been agreed to as "$1.98 F.O

-- Anonymous, November 02, 1998

Answers

B. Seattle?"

-- Anonymous, November 02, 1998

In this case, I think Better Foods should be awarded $1.07/lb. for damages, as calculated below. This amount reflects the (market price at the time of breach - contract price ) plus (incidentals).

Let's start with the market price determination. UCC 2-713(2) states that in cases of rejection after arrival, market price is to be determined as of the place of arrival (Boise). Therefore, to calculate this first component of the damages, we take the market price at time of breach ($3/lb for salmon in Boise on 8/21) minus the contract price ($1.98/lb), which yields $1.02.

To this $1.02 we then add incidentals incurred by the buyer -- here, transportation costs. Because the fillets were sold F.O.B. Seattle, this means that the buyer was responsible for paying freight charges from Seattle to Boise (as per Black's Law def. of F.O.B. outlined in my answer to pt. 1). So the total damages per pound should be $1.02 plus freght charge/lb. or

($1.02)+ ($.05) = $1.07/lb. in damages to Better Foods.

-- Anonymous, November 08, 1998