Lee Oldsmobile, Inc. v. Kaiden
363 A.2d 270, 32 Md. App. 556 (1976)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under Uniform Commercial Code § 2-706, a seller who resells goods after a buyer's breach must give the buyer reasonable notification of the intention to resell at a private sale. Failure to provide such notice precludes the seller from recovering the difference between the resale price and the contract price, limiting the seller's remedy to damages calculated under UCC § 2-708.
Facts:
- In August 1973, Mrs. Ada Kaiden sent a $5,000 deposit to Lee Oldsmobile, Inc. for the purchase of a specific Rolls-Royce automobile for a price of $29,500.
- The written order form did not specify a delivery date, but correspondence indicated an expected delivery in November.
- On November 21, 1973, Mrs. Kaiden telephoned Lee Oldsmobile and cancelled her order.
- On November 29, 1973, Lee Oldsmobile notified Mrs. Kaiden that the car was ready for delivery, which she declined.
- Lee Oldsmobile refused to return Mrs. Kaiden's $5,000 deposit.
- On January 17, 1974, without notifying Mrs. Kaiden of its intention to do so, Lee Oldsmobile sold the same Rolls-Royce to a different purchaser for $26,495.
Procedural Posture:
- Ada Kaiden and her husband filed suit against Lee Oldsmobile, Inc. in the Circuit Court for Anne Arundel County, a state trial court, seeking return of their $5,000 deposit.
- Following a bench trial (trial by judge without a jury), the court found that Mrs. Kaiden had breached the contract.
- The trial court calculated damages, disallowed the difference in resale price, but allowed certain incidental damages.
- The trial court entered a final judgment in favor of the Kaidens for $2,924.93 (the $5,000 deposit minus allowed incidental damages).
- Lee Oldsmobile, as appellant, appealed the judgment to the intermediate appellate court.
- The Kaidens, as cross-appellants, also appealed the trial court's decision to allow any incidental damages.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Under the Uniform Commercial Code, does a seller's failure to give a buyer reasonable notification of its intention to resell the goods at a private sale preclude the seller from recovering the difference between the resale price and the contract price as damages?
Opinions:
Majority - Powers, J.
Yes. A seller's failure to give a buyer reasonable notification of its intention to conduct a private resale prevents the seller from recovering damages measured by the difference between the contract price and the resale price. The Uniform Commercial Code, specifically § 2-706, requires that where a resale is at a private sale, the seller must give the buyer reasonable notification of his intention to resell. Because Lee Oldsmobile did not give the Kaidens this required notification, it is deprived of the remedy provided in § 2-706, which allows for recovery of the difference between the resale and contract prices. Consequently, Lee Oldsmobile is relegated to the damage formula in § 2-708, which measures damages by the difference between the market price and the contract price, plus any incidental damages. The court also held that a liquidated damages clause in the contract was unenforceable because the actual damages were capable of accurate estimation. While Lee Oldsmobile could not recover the resale price difference, it was still entitled to recover commercially reasonable incidental damages under § 2-710, as this remedy is available under both § 2-706 and § 2-708.
Analysis:
This case clarifies the strict procedural requirements a seller must follow under UCC § 2-706 to recover damages based on a resale price after a buyer's breach. The decision establishes that the notice requirement for a private resale is a mandatory condition precedent, and its absence forces the seller into the alternative damage calculation of UCC § 2-708 (market price minus contract price). This holding emphasizes the distinction between the UCC's primary and secondary remedies for sellers, preventing sellers from using a private resale to set the damage amount without first giving the breaching buyer a chance to protect their interests. The ruling also affirms that incidental damages under § 2-710 are recoverable regardless of which primary damage formula applies, as long as the incidental expenses themselves are commercially reasonable.
Unlock the full brief for Lee Oldsmobile, Inc. v. Kaiden