Read the text below and answer the questions. Suppose that Smile Dentist, Inc. i

Question

Read the text below and answer the questions.

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.]

1. 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

Based on the above scenario, we can assume that both the parties agreed to a contract for 6 years with all the terms and conditions 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.

However, as the scenario may differ as per the contract, if both parties agreed to the proper function/warranty of chairs less than a year then Smile Dentist cannot say it is a breach of contract and will have to then use the available chairs.

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

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