UCC § 2-708
Seller's Damages for Non-Acceptance or Repudiation
(1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (Section 2-710), but less expenses saved in consequence of the buyer’s breach. (2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article (Section 2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
Professor's notes
Section 2-708 provides the seller's damages formula when the buyer fails to accept or repudiates. Subsection (1) is the standard formula: the difference between the unpaid contract price and the market price at the time and place of tender, plus incidental damages, minus expenses saved. Subsection (2) is the lost-volume seller formula: if the measure in subsection (1) is inadequate to put the seller in as good a position as performance would have, the seller recovers the profit (including reasonable overhead) the seller would have made from full performance, plus incidental damages, minus payments received and costs avoided.
The doctrinal work is to give the lost-volume seller a recovery that market-price damages systematically undercompensate. A seller who can supply an unlimited quantity of identical goods (a car dealer with manufacturer replenishment, for example) suffers a lost sale when a buyer repudiates — not merely a price differential. If the seller resells to another buyer, the market-price formula gives zero damages, but the seller lost one unit of profit because absent the buyer's breach, the seller would have made two sales. Section 2-708(2) captures that lost profit directly.
Paradigm for § 2-708(1): A seller contracts to sell unique or limited goods for $10,000. Buyer repudiates. Market price at tender date is $9,000. Seller recovers $1,000 plus incidentals. Paradigm for § 2-708(2): A car dealer contracts to sell a car from its standard inventory for $30,000. Buyer repudiates. Dealer sells the same car to another buyer the next day for $30,000. Under § 2-708(1), damages would be zero. Under § 2-708(2), dealer recovers the profit on the sale — because it could have sold two cars but sold only one.
Students often miss the lost-volume analysis entirely and conclude the dealer suffered no harm. Ask: did the dealer lose a sale? How many sales would it have made without the breach versus with the breach? Once students see the counterfactual, the inadequacy of § 2-708(1) for fungible-goods sellers becomes clear.
Connect to UCC § 2-706 (resale damages — often preferable to § 2-708(1) because actual resale price is better evidence), UCC § 2-703 (seller's remedies menu), R2d § 347 (expectation damages), and the Chapter 24 materials on Hawkins v. McGee. The North American Foreign Trading case in Chapter 25 provides the setting for working through seller-side damages in a defective-performance context.
Text
UCC § 2-708. Seller’s Damages for Non-acceptance or Repudiation.
(1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (Section 2-710), but less expenses saved in consequence of the buyer’s breach.
(2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article (Section 2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
Source: UCC Article 2 (post-2022 amendments), as in the LawJ statutory corpus.