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There is a breach of contract in which a person A promised to never drink wine in the following month, while a person B promised to sell his car to the person A for a specific amount.

Person B decided one day after signing the contract not to sell his car to the person A.

What can the person A do?

context: studying contract law

Thank you.

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  • Was the car actually sold?
    – ohwilleke
    Nov 29, 2022 at 19:01

2 Answers 2

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B has breached the contract and the breach appears to amount to a repudiation of the contract.

A has the following courses of action available:

  1. Accept the repudiation and accept the status quo. Basically, do nothing.
  2. Accept the repudiation and sue for damages.
  3. Reject the repudiation and seek specific performance of the contract
  4. Reject the repudiation, seek specific performance, and sue for damages.

If A does 3 or 4 then they must continue to perform their obligations under the contract. That is, they must continue to abstain from wine and pay what the contract requires when the contract requires it.

Option 1 is only likely to be acceptable to A if they haven’t already paid money yet to B.

For Option 2, damages for breach of contract are expectation damages, that is, A is entitled to be placed in the position they would have been in had the B completed the contract without the breach. At a minimum, A would be entitled to a refund of any monies paid to B. Beyond that, A is free to pursue whatever damages they can justify. For example:

  • A is a used car dealer and can demonstrate that, on average, they resell the cars they buy at a 20% mark-up: damages would be 20% of the purchase price.
  • A can prove that they have a specific buyer lined up who was willing to pay $5,000 more then they were paying B: damages would be $5,000.
  • The agreed price is $2,000 less then the average market price for equivalent vehicles: damages would be $2,000.

Specific performance under options 3 and 4 is rarely granted as there is a preference in the courts for contracts to be economically efficient. It is only ordered where damages would be an insufficient remedy, typically when the good being sold is unique. This most commonly happens in real estate or fine art because those products are unique and one house or painting is not a substitute for another. It could be available if the car was unique or rare: one of these for example.

Damages under Option 4 would be the reasonable costs to A of the delay in the performance of the contract. Rental car fees or taxi fares for example.

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B has repudiated the contract, and is liable for resulting damages to A. The damages would be minimal, depending on whether "one day after signing" means "1 day after signing" or "some day after signing". Without any further information on the circumstances, it would seem that there was only trivial damage done to A, so A would be wisest to ask for a couple of dollars compensation for inconvenience. A stands no realistic chance of getting a court order forcing the sale of the car.

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