30 N.Y.2d 393, 384 N.Y.S.2d 165, 285 N.E.2d 31 (1972)
Plaintiffs contracted with defendant Retail Marine Corp. to purchase a new boat of a specified model for $12,587.40, initially depositing $40 and later increasing the deposit to $4,250 to obtain immediate delivery on a firm sale basis instead of the originally specified four-to-six-week period.1
Plaintiffs' attorney sent defendant a letter rescinding the contract on the ground that plaintiff Neri faced imminent hospitalization and surgery that would make payments impossible.2 The boat had already been ordered from the manufacturer and was delivered to defendant at or before receipt of the rescission letter.3
Plaintiffs commenced an action to recover their deposit after defendant declined to refund it.4 Defendant counterclaimed for breach of contract and damages in the amount of $4,250.5 Defendant obtained summary judgment on the issue of liability, after which Special Term directed an assessment of damages to determine whether plaintiffs were entitled to return of any portion of their down payment.6
At the damages hearing, the boat was shown to have been sold four months later to another buyer for the same price negotiated with plaintiffs.7 Defendant proved without contradiction that its profit on the contract sale would have been $2,579 and that it had incurred $674 in expenses for storage, upkeep, finance charges, and insurance during the period the boat remained unsold; defendant also sought $1,250 in attorneys' fees.8
The trial court awarded defendant $500 on its counterclaim and directed that plaintiffs recover the $3,750 balance of their deposit.9 The judgment was affirmed without opinion by the Appellate Division, and defendant appealed to the Court of Appeals by leave.10
Whether a retail dealer may recover lost profits upon a buyer's repudiation of a contract for the sale of goods?11
Under Uniform Commercial Code § 2-708(2), if the measure of damages provided in subsection (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 which the seller would have made from full performance by the buyer.12 This includes reasonable overhead, together with any incidental damages provided in this Article (Section 2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.13
Yes. The established facts show that plaintiffs contracted to purchase the boat for $12,587.40, made a deposit of $4,250 to secure immediate delivery on a firm sale basis, and then repudiated via their attorney's letter citing Neri's impending hospitalization and surgery.14
Because defendant is a retail dealer with an inexhaustible supply of standard-priced goods, that resale left it one sale short of the position full performance would have produced.15 Defendant proved without contradiction that its profit on the contract would have been $2,579.16
The trial court therefore erred by limiting recovery to the $500 statutory offset under § 2-718(2)(b) instead of applying the lost-profit measure of § 2-708(2).17
Whether incidental damages may be recovered by the seller in addition to lost profits following the buyer's repudiation?20
Uniform Commercial Code § 2-708(2) entitles the seller to recover its profit together with any incidental damages provided in this Article (Section 2-710).21 Section 2-710 defines those damages to include any commercially reasonable charges, expenses or commissions incurred in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise, resulting from the breach.22
Yes. The established facts establish that defendant incurred $674 in storage, upkeep, finance charges, and insurance expenses while the boat remained unsold between the date performance was due and the later resale.23 These items were proven without objection or contradiction at the damages hearing.24 The seller's right to lost profits under § 2-708(2) is not exclusive, and the statute expressly authorizes recovery of incidental damages in addition to profit.25
The trial court's finding that defendant failed to prove any incidental damages lacks support in the record and cannot stand.26
Incidental damages may be recovered by the seller in addition to lost profits following the buyer's repudiation.27
Whether attorneys' fees incurred in the action constitute recoverable incidental damages?28
Attorney’s fees incurred in an action such as this are not in the nature of the protective expenses contemplated by the statute (Uniform Commercial Code, § 1-106, subd. [1]; § 2-710; § 2-708, subsection [2]).29
No. Defendant sought $1,250 in attorneys' fees incurred in prosecuting its counterclaim.30 Attorney’s fees incurred in an action such as this are not in the nature of the protective expenses contemplated by the statute.31 Such fees do not qualify as commercially reasonable charges resulting from the breach that are recoverable under § 2-710.32 The statute contemplates expenses incurred to protect or care for the goods after breach, not litigation costs to enforce the seller's rights.33
The trial court correctly denied recovery of attorneys' fees on this ground.34
Attorneys' fees incurred in the action do not constitute recoverable incidental damages.35