When one of the parties to a contract fails to perform its obligations, under th

Question

When one of the parties to a contract fails to perform its obligations, under the UCC the injured party has a variety of remedies available depending on the type of breach, the statute of limitations, and whether the injured party is the buyer or seller.

Suppose that Smile Dentist, Inc. is buying 150 new dental chairs from Sit Back, Corp. Because the parties are long-term business partners, a contract that both parties signed included a provision that any breach of the agreement will result in damages of $1 being paid to the non-breaching party. Five years after the agreement is signed and the chairs delivered, a dispute arises when 30 percent of the chairs begin to malfunction during prolonged use. Smile Dentist sues Sit Back for its lost profits as a result of having nearly one third of its chairs out of commission. [Assume that the parties agreed to extend the statute of limitations to six years.]

Suppose that instead of happening five years after the initial sale, the breach happened just one year later. Would Smile Dentist be able to recover its lost profits, and if so under what doctrine? [Assume that no substitute chairs were available for a comparable price, and that the defective chairs injured no patients.]

Explanation / Answer

Seeing the above scenario, we can assume that both the parties agreed to a contract for 6 years with all the terms and condictions in mind. If a chair is broken or malfunctioning after a period of time of one year and if any warranty is mentioned in the contract for more than 1 year then definitely Smile Dentist can file the suit and recover its lost profit.

But as the scenario may differ that in agreement, if both parties agreed to the proper function/warranty of chairs less than a year then Smile Dentist can not say it is a breach of contract and will have to then use the available chairs.

Also though the chairs are least expensive in market, if it is not serving its purpose for longer run then it would incurr the replacement cost as well as increase the number of injured patient which will be loss of business. If by putting few more amount Dentist can buy a good chair which lasts longer than surely he should not think of cost as one time because it will turn up from his bussiness.

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