Also known as: saved expenses
Written by attorneys — see sources below.
A deduction subtracted from a buyer's or seller's damages award when calculating expectation damages under the Uniform Commercial Code. It accounts for costs the non-breaching party avoids because the breach relieved it of performance obligations.
Echo Systems contracted to buy servers from Equinox Energy for delivery to a remote site. Equinox breached by failing to deliver. Echo covered by purchasing servers from another supplier that included local pickup. The court subtracted the avoided freight charges from Echo's cover damages.
Elysium Media agreed to buy broadcast equipment from Enigma Technologies at a fixed price. Enigma repudiated before delivery. Elysium did not cover and instead sought market damages. The court reduced the award by the inspection and storage fees Elysium no longer had to pay.
Eugene Ellsworth contracted to buy a boat from Retail Marine. He repudiated before delivery. Retail Marine resold the boat to another buyer. The court calculated the seller's damages by subtracting the commission and storage costs saved because the original sale never occurred.
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. 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. The boat had already been ordered from the manufacturer and was delivered to defendant at or before receipt of the rescission letter. Plaintiffs commenced an action to recover their deposit after defendant declined to refund it. Defendant counterclaimed for breach of contract and damages in the amount of $4,250. 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. 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. 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. The trial court awarded defendant $500 on its counterclaim and directed that plaintiffs recover the $3,750 balance of their deposit. The judgment was affirmed without opinion by the Appellate Division, and defendant appealed to the Court of Appeals by leave.
View caseA court identifies costs the non-breaching party would have incurred but for the breach, such as transportation, storage, or inspection fees. Only those expenses directly avoided because performance was excused are subtracted from the damages award.
Supporting sources
No. A buyer who does not cover may still recover market damages, and the expenses-saved deduction applies to that measure as well. The rule preserves alternative remedies while ensuring the award reflects actual net loss.
Supporting sources
New expenses are not subtracted as saved expenses. Only costs that the breach itself eliminated qualify for the deduction. Additional mitigation costs may instead be recovered as incidental damages if they are reasonable.
Supporting sources
…the contract price together with any incidental and consequential damages provided in this article (section 84-2-715), but less expenses saved in consequence of the seller's breach." Neither party argues that the Uniform Commercial Code is inapplicable. Both agree that the issue to be determined is which provision of the UCC…