Edwards Computer Component Manufacturing contracted to buy 1,000 at $10 per poun

Question

Edwards Computer Component Manufacturing contracted to buy 1,000 at $10 per pound of a rare mineral from Rare Minerals, Inc. Rare Minerals failed to deliver Edwards the mineral and therefore Edwards immediately went into the market to find the rare mineral; the best price for the rare mineral that he could find was $50 per pound from another supplier. Because Edwards couldn’t immediately afford to spend the $50,000, he missed a deadline to submit a bid and compete for the Christmas trade in computers as he couldn’t produce a specific computer component which needed the rare mineral ; he bought the rare mineral in January for $50 per pound.

(a) What damages is Edward entitled to recover?

(b) Would it make any difference if Edwards had told Rare Minerals, Inc that he wanted the special mineral to make computers for the Christmas trade in computers and that he had accepted contracts for delivery to customers by certain dates?

Explanation / Answer

(a) The damages Edward entitled to recover is of $ 50,000- $10,000 = $ 40,000. As the 1000 units he will buy at the cost of $ 10 per pound so, 1000* 10 = 10,000. He has paid $ 10,000 but he has to pay $ 40,000 more.

(b) Yes, it makes the difference if Edwards had told Rare Minerals, Inc that he wanted the special mineral to make computers for the Christmas trade in computers and that he had accepted contracts for delivery to customers by certain dates. He might get the benefit in the damages he incurred as he may get the compensation for the damages.

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