Seller’s Damages Following Resale Under Article Two of the Uniform Commercial Code

The seller’s right to resell contracted-for goods following a breach by the buyer is set forth in section 2-706 of the Uniform Commercial Code (Code). That section also contains a statement of the conditions placed upon the exercise of that right and provides the measure of recovery if the resale is made “in good faith and in a commercially reasonable manner”:

[T]he seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (Section 2-710), but less expenses saved in consequence of the buyer’s breach.

In most of the cases in which the seller has resold, this section can be applied without difficulty. There are, however, some situations in which judicial interpretation will be needed in order to reach a desired result. The purpose of this article is to examine the measure of damages provided in section 2-706 as applied both to the usual and to the not-so-usual cases.