1. Nature of incidental and consequential damages
1. Nature of incidental and consequential damages
Consequential damages under this section include the buyer's loss of use of the goods. McCoolidge v. Oyvetsky, 292 Neb. 955, 874 N.W.2d 892 (2016).
Incidental damages under this section include the cost of storing defective goods. McCoolidge v. Oyvetsky, 292 Neb. 955, 874 N.W.2d 892 (2016).
Lost profits resulting from increased labor costs and decreased revenues discussed and distinguished. El Fredo Pizza, Inc. v. Roto-Flex Oven Co., 199 Neb. 697, 261 N.W.2d 358 (1978).
Consequential damages resulting from the seller's breach of contract include any loss resulting from general or particular requirements and needs of which the seller, when contracting, knew and which could not be reasonably prevented. Burgess v. Curly Olney's, Inc., 198 Neb. 153, 251 N.W.2d 888 (1977).
Consequential damages from seller's breach include any loss resulting from general or particular requirements or needs of which seller had reason to know at time of contracting, and which could not reasonably be prevented by cover or otherwise. National Farmers Organization, Inc. v. McCook Feed & Supply Co., 196 Neb. 424, 243 N.W.2d 335 (1976).
Consequential damages, as defined in subsection (2) of this section, occur as a consequence of special circumstances known or reasonably supposed to have been contemplated by the parties when the contract was made. Adams v. American Cyanamid Co., 1 Neb. App. 337, 498 N.W.2d 577 (1992).
The existence of "special circumstances" under section 2-714 is not a precondition to a buyer's recovery of incidental and consequential damages under this section. McCoolidge v. Oyvetsky, 292 Neb. 955, 874 N.W.2d 892 (2016).
In a warranty action against the manufacturer of an automatic collator, plaintiff's failure to prove what further profits would have been made had the collator functioned as warranted entitled defendant to a directed verdict as to consequential damages. Plaintiff's failure to prove the cost of the job if the collator had been used prevented the determination of the increase in costs of manual collation, thereby entitling defendant to a directed verdict as to consequential damages. Settell's, Inc. v. Pitney Bowes, Inc., 209 Neb. 26, 305 N.W.2d 896 (1981).
Breach of warranty issue supported by evidence of representation that milk production would be increased by feeding seller's feed supplement in amounts as instructed, and proof of loss in production thereby, but directed verdict for defendant affirmed because purchaser failed to prove extent of damages therefrom. Shotkoski v. Standard Chemical Manuf. Co., 195 Neb. 22, 237 N.W.2d 92 (1975).
Once city notified contractor seller of sewage treatment plant of contractor seller's breach of contract, although city had accepted plant, city was entitled to recover damages for seller's breach and for incidental and consequential damages. Omaha Pollution Control Corp. v. Carver-Greenfield Corp., 413 F.Supp. 1069 (D. Neb. 1976).
Prior Uniform Statutory Provisions: Subsection (2)(b) — sections 69(7) and 70, Uniform Sales Act.
Purposes of Changes and New Matter:
1. Subsection (1) is intended to provide reimbursement for the buyer who incurs reasonable expenses in connection with the handling of rightfully rejected goods or goods whose acceptance may be justifiably revoked, or in connection with effecting cover where the breach of the contract lies in nonconformity or nondelivery of the goods. The incidental damages listed are not intended to be exhaustive but are merely illustrative of the typical kinds of incidental damage.
2. Subsection (2) operates to allow the buyer, in an appropriate case, any consequential damages which are the result of the seller's breach. The "tacit agreement" test for the recovery of consequential damages is rejected. Although the older rule at common law which made the seller liable for all consequential damages of which he or she had "reason to know" in advance is followed, the liberality of that rule is modified by refusing to permit recovery unless the buyer could not reasonably have prevented the loss by cover or otherwise. Subparagraph (2) carries forward the provisions of the prior uniform statutory provision as to consequential damages resulting from breach of warranty, but modifies the rule by requiring first that the buyer attempt to minimize his or her damages in good faith, either by cover or otherwise.
3. In the absence of excuse under the section on merchant's excuse by failure of presupposed conditions, the seller is liable for consequential damages in all cases where he or she had reason to know of the buyer's general or particular requirements at the time of contracting. It is not necessary that there be a conscious acceptance of an insurer's liability on the seller's part, nor is his or her obligation for consequential damages limited to cases in which he or she fails to use due effort in good faith.
Particular needs of the buyer must generally be made known to the seller while general needs must rarely be made known to charge the seller with knowledge.
Any seller who does not wish to take the risk of consequential damages has available the section on contractual limitation of remedy.
4. The burden of proving the extent of loss incurred by way of consequential damage is on the buyer, but the section on liberal administration of remedies rejects any doctrine of certainty which requires almost mathematical precision in the proof of loss. Loss may be determined in any manner which is reasonable under the circumstances.
5. Subsection (2)(b) states the usual rule as to breach of warranty, allowing recovery for injuries "proximately" resulting from the breach. Where the injury involved follows the use of goods without discovery of the defect causing the damage, the question of "proximate" cause turns on whether it was reasonable for the buyer to use the goods without such inspection as would have revealed the defects. If it was not reasonable for him or her to do so, or if he or she did in fact discover the defect prior to his or her use, the injury would not proximately result from the breach of warranty.
6. In the case of sale of wares to one in the business of reselling them, resale is one of the requirements of which the seller has reason to know within the meaning of subsection (2)(a).
Point 1: Section 2-608.
Point 3: Sections 1-203, 2-615, and 2-719.
Point 4: Section 1-106.
Definitional Cross References:
"Cover". Section 2-712.
"Goods". Section 2-105.
"Person". Section 1-201.
"Receipt" of goods. Section 2-103.
"Seller". Section 2-103.