Neri v. Retail Marine Corp. – Case Brief

http://www.lawnix.com/cases/neri-retail-marine.htmlNeri v. Retail Marine Corp., 30 N.Y.2d 393, 334 N.Y.S.2d 165 (N.Y. 1972).

Facts: Neri (P) paid a $4,250 deposit on the purchase of a $12,600 boat from Retail Marine (D). Neri repudiated the sale one week later due to an upcoming operation. Neri requested a refund of his deposit and D refused because the boat had already been delivered from the factory. P sued to recover his deposit and D filed a counterclaim for $4,250 for lost profits and expenses. D sold the boat four months later to a different customer for the same price.

D proved that its expenses and expected profit was $3,250. The trial court entered summary judgment to P minus $500 pursuant to UCC 20718 and D appealed.

Issue: Can a volume retail seller of standard priced goods recover lost profits when a buyer defaults on a sales contract, if market damages are inadequate to put the seller in as good a position as he would have been had the contract been performed?

Holding and Rule: Yes. A volume retail seller of standard priced goods may recover lost profits when a buyer defaults on a purchase if market damages are inadequate to put the seller in as good a position as he would have been had the contract been performed.

Section 2-718 establishes that the buyer’s right to restitution is subject to offset to the extent that the seller establishes a right to recover damages under the provisions of this Article other than subsection (1).

UCC 2-708(2) provides that if UCC 2-708(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 plus incidental expenses and damages.

In this case the buyer’s right to restitution and the seller’s rights to offsets under UCC 2-718 were established on the motion for summary judgment. The measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as full performance. Under 2-708 (2) the seller is entitled to its profit including reasonable overhead along with incidental damages, due allowance for costs reasonably incurred and due credit for payments or proceeds of resale. Due credit for payments or proceeds of resale is inapplicable to this retail sales contract as this provision pertains to the privilege of the seller to realize the junk value of the items if it was manifestly useless to complete the operation of manufacture. P is therefore entitled to restitution in the sum of $4,250 less $3,250 for lost profits and incidental expenses.

Disposition: Affirmed and modified.

Plowman v. Indian Refining Co. – Case Brief

http://www.lawnix.com/cases/plowman-indian.html

Plowman v. Indian Refining Co., 20 F.Supp. 1 (E.D. Ill. 1937).

Facts: The plaintiffs were Plowman (P) and several others including the administrators of the estates of five deceased persons. Plowman had been an employee of Indian Refining Co. (D). Plowman alleged that the vice-president and general manager of Indian Refining called the employees individually into his office, and made a contract in which each would receive one half of their salary at the time for life.

Ps contend that consideration arose out of the relationship that existed at the time, D’s desire to provide for their future welfare, and the provision in the contracts whereby each employee would call at the office each payday. Ps remained on the pay roll, but according to their testimony, they were not to render any further services, their only obligation being to call at the office each payday. After ten months, the payments cease and Ps were advised by D’s personnel officer that the arrangement was terminated.

Ps sued D for breach of contract. D offered evidence to prove that there was no consideration for the promise to make the payments, and that it was beyond the power of any of the persons alleged to have contracted to create by agreement or by estoppel any liability of the company to pay wages to employees during the remainders of their lives if they did not render actual services. P’s alleged estoppel.

Issue: May past conduct serve as consideration to create an enforceable contract?

Holding and Rule: No. For consideration to be present there must be an inducement of current performance.

The court held that consideration is something given in exchange for a promise or in a reliance upon the promise. Something which has been delivered before the promise is executed, and, therefore, made without reference to it, cannot properly be legal consideration.

The court stated that the doctrine of validity of moral consideration is condemned because it is contrary in character to actual consideration. Appreciation of past services or pleasure afforded the employer thereby is not a sufficient consideration.

The court held that in this case Ps had proven that they were ready, willing, and able to travel to and report semimonthly to the main office, but this did not furnish a legal consideration.

The court held that the act was simply a condition imposed upon them in obtaining gratuitous pensions.

Disposition: For D