162 Cal. App. 3d 905, 209 Cal. Rptr. 60 (1984)
Allied Canners & Packers, Inc., a San Francisco-based exporter of dry, canned, and frozen food products, entered into two contracts with Victor Packing Company, a Fresno packer of fruits, on September 3 and September 8, 1976.1
Each contract called for Victor to sell and deliver five containers holding 37,500 pounds of select Natural Thompson Seedless raisins FOB at the Port of Oakland during October 1976 at a price of 29.75 cents per pound less a 4 percent discount.2 Allied had contracted to resell the raisins to Japanese firms and stood to gain $4,462.50 on the overall transaction.3
The Raisin Administrative Committee governed the sale of reserve raisins.4 Victor, as a member, could purchase reserve raisins at 22 cents per pound until the morning of September 10, 1976.5
Heavy rains on September 9 damaged the drying crop, prompting the Committee to withdraw its offer after 8:30 a.m. on September 10.6 Victor had not applied in time, and subsequent efforts by both parties to secure 375,000 pounds of raisins proved unsuccessful.7
On September 15, 1976, Victor informed Allied that it would not deliver the raisins under the contracts.8 Allied made no purchases to cover on the open market, where prices reached 80 to 87 cents per pound by October.9
One buyer rescinded its contract for three containers, but Shoei Foods demanded the remaining seven containers; however, a force majeure provision protected Allied, and no lawsuit followed despite the passage of time until judgment in July 1981.10
Following a court trial, the trial court determined that Allied acted as a broker rather than a buyer and awarded damages of only $4,462.50.11
Allied appealed the judgment to the California Court of Appeal.12
Whether Allied was a buyer within the meaning of the Commercial Code under its contracts with Victor?13
Section 2103, subdivision (1)(a), of the Commercial Code defines 'buyer' as a person who buys or contracts to buy goods.14
Yes. The contracts between Allied and Victor mention only those two parties and provide that Victor was to ship the raisins to Allied at the dock in Oakland.15 Victor did not even know the name of Shoei.16 Had Victor shipped the raisins but Allied not paid for them, Victor would have sued Allied for payment as the buyer.17
Although Allied had contracted to sell the raisins to another, it is not uncommon for an exporter to have back-to-back contracts, one to buy and the other to sell.18 Allied was a buyer in its contract with Victor and had a forward contract to sell the raisins to Shoei.
Allied was a buyer within the meaning of the Commercial Code.19
Whether the proper measure of damages for Victor's breach was the difference between market price and contract price or Allied's actual lost profit of $4,462.50?20
Under Commercial Code section 2713, subdivision (1), the measure of damages for nondelivery is the difference between the market price at the time when the buyer learned of the breach and the contract price. However, section 1106, subdivision (1), provides that remedies shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed.21
No. In the circumstances of this case, in which the seller knew that the buyer had a resale contract, the buyer has not been able to show that it will be liable in damages to the buyer on its forward contract, and there has been no finding of bad faith on the part of the seller, the policy of section 1106, subdivision (1), requires that the award of damages to the buyer be limited to its actual loss, the amount it expected to make on the transaction.22 Victor knew of the resale because raisins would not be released by RAC unless Allied provided it with the name of the buyer in its forward contract.23 Allied has not shown liability to Shoei, as the force majeure clause protected it and no suit was brought.24 The trial court found no bad faith by Victor, as the rains caused a severe problem and Victor made substantial efforts to obtain the raisins.25
Therefore, the proper measure is the actual lost profit of $4,462.50 rather than the market-contract differential of approximately $150,000.26
The proper measure of damages was Allied's actual lost profit of $4,462.50.27