Wednesday, December 25, 2013

KGM Harvesting Co. v. Fresh Network case brief

KGM Harvesting Co. v. Fresh Network case brief summary
36 Cal. App. 4th 376 (1995)

Defendant seller challenged a judgment of the Superior Court of Monterey County (California) that awarded damages to plaintiff buyer in accordance with Cal. Com. Code § 2712, arguing that the damage award was excessive and that damages under § 2712 were improper where plaintiff recovered the expenses incurred in obtaining substitute goods after defendant's breach by passing those expenses on to its customers.

Defendant seller had a contract to deliver lettuce each week to plaintiff buyer. When the price of lettuce rose dramatically, defendant refused to deliver the required quantity of lettuce to plaintiff. Plaintiff then purchased lettuce on the open market in order to fulfill its contractual obligations to third parties and brought suit to recover damages incurred by defendant's breach. The jury returned a verdict awarding plaintiff damages in an amount equal to the difference between the contract price and the price plaintiff was forced to pay for substitute lettuce on the open market. Defendant appealed, arguing that the award was excessive and that the contract-cover differential of Cal. Com. Code § 2712 was inappropriate where plaintiff was able to pass on its extra expenses to the open market.


  • In affirming, the appellate court concluded that where plaintiff covered by making in good faith and without unreasonable delay any reasonable purchase of goods in substitution for those due from defendant, plaintiff could recover from defendant as damages the difference between the cost of cover and the contract price in accordance with Cal. Com. Code § 2712.
The judgment in favor of plaintiff buyer was affirmed, as the proper measure of damages incurred by plaintiff based upon defendant seller's breach was the difference between the contract price of goods and the price of the goods that plaintiff purchased in good faith and without reasonable delay in substitution for those goods that defendant failed to deliver.

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