Business Law 101 / Remedies For Breach In The Sale Of Goods

By Albert L. Kelley

When there is a breach of contract by the buyer, the seller has numerous remedies. First, since the seller has an automatic lien on the goods in his possession, he can retain possession of the goods until the buyer pays for them. For the lien to be effective though, the seller must keep possession of the goods. Once possession has been transferred to the buyer, the lien disappears.

Second, the seller can resell the items to another party. If he cannot sell the items for the same price the buyer was to pay, the buyer remains liable for the difference. Before reselling, the seller must give notice to the buyer that he is reselling the goods, and allow the buyer the opportunity to pay for the goods.

Third, the seller can cancel the contract. This ends all obligations of the parties.

Fourth, the seller can sue the buyer for damages. This may allow the seller to recover his costs, depending on the terms of the agreement. The amount of damage depends on the circumstances. If the buyer accepts the goods without paying, then the damage is the full amount owed. If the buyer wrongfully refuses acceptance of the goods, the damage is the difference between the fair market value of the goods and the amount on the contract, since the seller can still sell the items to recover part of his loss. However, if the items are specially built and the buyer refuses acceptance, the buyer may be responsible for the full amount, regardless of the fair market value, because the goods may not be easily resold.

What remedies does the buyer have if the seller breaches?

First, if the seller sends the wrong merchandise, the buyer may refuse to accept it. This is also true if the seller sends the right items but the wrong amount. The buyer does not have to accept anything except what he contracted for. The rejection needs to be made within a reasonable time after delivery of the items. The buyer must notify the seller of the rejection and then wait for the seller to give him instructions as to how to dispose of the goods.

Second, if the goods have some defect that is not immediately apparent, the buyer may revoke the acceptance upon discovery of the defect. The revocation must be made within a reasonable time though as a substantial delay may act as an irrevocable acceptance of the goods. After the acceptance has been revoked, the buyer may then cancel the contract or require the seller to deliver non-defective goods. He does not have to physically return the items, until the seller gives instructions on how to return them.

Third, if the seller fails to deliver the items, the buyer may sue for damages. If the buyer attempts to cover the goods (that is, buy them elsewhere), he may recover the excess of the price actually paid from the price contracted.

Fourth, the buyer may cancel the agreement and request a refund of any monies paid.

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of “Basics of Business Law” and “Basics of Florida’s Small Claims Court” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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