Under UCC 2, if the seller resells after buyer breach, how are damages calculated?

• A. The market price at breach
• B. The resale price in good faith minus the contract price
• C. The contract price
• D. The seller's lost profits

Answer: (B)

The key idea is that when the seller resells after a buyer breach, the remedies are aimed at making the seller whole for the breach by looking at what was promised versus what was actually obtained on resale.

Under UCC 2-706, the seller’s damages are the difference between the contract price and the resale price, plus incidental damages caused by the breach, minus any expenses saved as a result of not having to complete performance. In other words, the seller is put in roughly the position they would have been in if the buyer had performed, up to the amount actually realized on the resale.

Example: if the contract price is 100 and the goods are resold for 70, the shortfall is 30. If there are incidental resale costs (like broker fees, storage, or transportation) of 5, and no savings on other expenses, total damages would be 30 + 5 = 35.

If the resale price exceeds the contract price, the damages under this remedy do not go beyond zero (the seller isn’t entitled to extra damages simply because the resale brought in more than the contract price), though incidental damages may still apply. The requirement that the resale be in good faith and commercially reasonable is part of this measure.