Can difference in price be damages?

Question

Bob places an online order. The store confirms that the exact thing Bob ordered is in the warehouse and can be shipped immediately, and sends invoice. Bob pays.

Several days later the store says that they looked everywhere in their warehouse but could not find exactly what Bob ordered. They suggested two options for Bob:

• wait several weeks for a new batch to arrive in the warehouse; or
• agree to get same thing but different colour now.

Bob finds what he did not get — in a local store at a higher price.

It is no question that Bob is eligible for refund from the online store. But is he also eligible for the difference in price as damages?

Answer 1

Yes, but ...

For the situation you describe, no.

First, Bob is not eligible for a refund - NZ Consumer Protection law entitles Bob to a refund in certain circumstances if the product is faulty - the product isn't faulty, just currently unavailable.

If Bob can prove that the misrepresentation that the product was in stock induced him to enter the contract then he can rescind the contract and get his money back. Whether this was the case would depend on if Bob had made it clear that he would only place the order if it could be shipped immediately; this wouldn't be the case if he simply asked: "Is it in stock?"

If he can prove the misrepresentation was negligent or fraudulent rather than innocent ("belief on reasonable grounds up till the time of the contract that the facts represented are true") he can either rescind or claim damages. It seems unlikely that Bob would be able to do that.

Another way that he would be entitled to damages is if the time of delivery was a term of the contract - it almost certainly wasn't for a normal online order. However, if Bob is ordering hundreds of thousands of dollars worth of mining or construction equipment then the time for delivery would almost certainly be a term of the contract. Failure to deliver would entitle Bob to damages and, if the delay were egregious enough ("several weeks" isn't), to terminate the contract.

If he were entitled to damages, they would be the cost to Bob of having to wait "several weeks". For a normal consumer purchase, this would be close to if not exactly equal to $0.00. For the aforesaid equipment, this could be hundreds of thousands, even millions of dollars a day. In the latter case, Bob is obliged to minimise those losses - if he can pick up a stacker-reclaimer at Bunnings at a higher price but less than the cost of not having one, then, yes, the damages would be the difference in the price.