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ted, by completing and tendering them, to recover the contract price.1 His remedy is an action for the damages he has sustained by reason of not being permitted to complete the contract, and the measure of his damages will be the difference between the cost of manufacturing or producing the goods and the price he was to receive for them,2 "making reasonable deduction for the less time engaged, and for release from the care, trouble, risk and responsibility attending a full execution of the contract."
§ 1703. The same rule also was applied where there had been a contract to manufacture and supply goods as ordered by the buyer, and the buyer, after receiving and paying for part, refused to receive any more. The court, indeed, attached much importance to the fact that the goods were of a perishable nature, so that if made they might not endure until a market could be found, and for this reason held that the ordinary rule allowing the difference between the contract and the market price should not apply. The case, however, seems not in need of such distinction to bring it within the rule laid down in the preceding section.
§ 1704. Loss of profits.- If it be urged, as it sometimes is, that this rule operates to give the plaintiff damages for a loss
1 Tufts v. Weinfeld (1894), 88 Wis. (1890), 135 Pa. St. 132, 19 Atl. R. 1008; 647, 60 N. W. R. 992. Kingman v. Hanna Wagon Co. (1898), 176 Ill. 545, 52 N. E. R. 328.
Contract price not fixed —“Lowest jobbing prices."- Where the price to be paid is not fixed by the contract, but is to be the "lowest jobbing price," then the measure will be the difference between such price and the cost of production. Beardsley v. Smith (1895), 61 Ill. App. 340.
3 United States v. Speed (1868), 75 U. S. (8 Wall.) 77.
4 Todd v. Gamble (1896), 148 N. Y. 382, 42 N. E. R. 982.
2 Hinckley v. Pittsburgh Steel Co. (1886), 121 U. S. 264, 30 L. ed. 967, 7 Sup. Ct. R. 875; Mechem's Cases on Damages, 272; Chapman v. Kansas City, etc. Ry. Co. (1898), 146 Mo. 481, 48 S. W. R. 646; Black River Lumber Co. v. Warner (1887), 93 Mo. 374, 6 S. W. R. 210: American Bridge Co. v. Bullen Co. (1896), 29 Oreg. 549, 46 Pac. R. 138: Williams v. Crosby Lumber Co. (1896), 118 N. C. 928, 24 S. E. R. 800; Tufts v. Weinfeld (1894), 88 Wis. 647, 60 N. W. R. 992; Muskegon Curtain Roll Co. v. Keystone Mfg. Co.
of profits, it is to be replied that a loss of profits is always a proper subject for compensation if such a loss of profits can be shown with reasonable certainty and without resorting to speculation or conjecture.' As said by the supreme court of the United States, "it by no means follows that profits are not to be allowed, understanding, as we must, the term 'profits as meaning the gain which the plaintiff would have made if he had been permitted to complete his contract. Actual damages clearly include the direct and actual loss which the plaintiff sustains propter rem ipsam non habitam. And in a case of a contract like this, that loss is, among other things, the difference between the cost of doing the work and the price to be paid for it. This difference is the inducement and real consideration which causes the contractor to enter into the contract. For this he expends his time, exerts his skill, uses his capital, and assumes the risks which attend the enterprise. And to deprive him of it, when the other party has broken the contract and unlawfully put an end to the work, would be unjust. There is no rule of law which requires us to inflict this injustice. Whenever profits are spoken of as not a subject of damages, it will be found that something contingent upon future bargains, or speculations, or states of the market, are referred to, and not the difference between the agreed price of something contracted for and its ascertainable value or cost."
§ 1705. Form of repudiation.- It is not always necessary that the buyer shall, in express terms, repudiate the contract or countermand the order. Such a result may be inferred from his conduct; and where, by the contract, he is to do the first act, as, for example, to give instructions as to the manner of manufacture or to furnish the necessary directions for ship
1 Masterton v. Mayor of Brooklyn (1845), 7 Hill (N. Y.), 61, 42 Am. Dec. 38; Mechem's Cases on Damages, 141.
2 Philadelphia, etc. R. Co. v. How. ard (1851), 54 U. S. (13 How.) 307,
quoted with approval in Hinckley v. Pittsburgh Steel Co., 121 U. S. 264, supra. To same effect: Tahoe Ice Co. v. Union Ice Co. (1895), 109 Cal. 242, 41 Pac. R. 1020, and cases cited.
ment, his failure or refusal to do this may be equivalent to a repudiation.'
§ 1706. Effect on seller's rights of repudiation by the buyer. As has been seen in a previous chapter, it is not within the power of the vendee to put an end to the contract without the concurrence of the seller. The latter, if he will, may acquiesce in the buyer's act so far as to treat it as a present termination and pursue his remedies as for a present breach. Delivery or even tender of the goods is not necessary where the buyer has thus declared his intention not to receive them.*
§ 1707. Seller not obliged to treat it as a present breach. But, as has also been seen," the seller is not obliged to regard the buyer's repudiation as a present breach. He may not, indeed, thereafter proceed to do more in order to enhance his damages, but he may treat the contract as in force until the time fixed for its performance has arrived, and then have his damages ascertained as though the contract had been broken on that date.
I See Weill v. American Metal Co. (1899), 182 Ill. 128, 54 N. E. R. 1050; Hinckley v. Pittsburgh Steel Co. (1887), 121 U. S. 264; Mechem's Cas. on Damages, 272.
supra, was an action of assumpsit by Young and another against Kadish and another to recover damages for the breach of a contract whereby appellees, on the 15th of December, 1880. sold to appellants one hundred thousand bushels of barley at $1.20 per bushel, to be delivered and paid for at such time during the month of January, 1881, as appellees should elect. On the next day after the contract was made the appellants gave notice to the appellees that they would not receive the barley and comply with the terms of the contract. The appellees, however, refused to consider the contract broken, and on the 12th of January they tendered to appellants the one hundred thousand bushels of barley, which tender was refused. Within a reasonable time thereafter the ap
2 See ante, § 1088.
3 See Roehm v. Horst (1900), 178 U. S. 1, 44 L. ed. 953, 20 Sup. Ct. R. 780, quoted fully in notes to § 1089, ante, where other cases will be found fully collected.
4 Pancake v. Campbell (1897), 44 W. Va. 82, 28 S. E. R. 719; Morris v. Cohn (1891), 55 Ark. 401, 18 S. W. R. 384.
5 See ante, § 1088.
"See Kadish v. Young (1883), 108 Ill. 170, 48 Am. R. 548; Mechem's Cas. on Damages, 265; Roebling Sons Co. v. Lock Stitch Fence Co. (1889), 130 Ill. 660, 22 N. E. R. 518.
Kadish v. Young (1883), 108 Ill. 170,
Contract kept alive for benefit of both parties. If, however, the seller elects to treat the contract as
pellees sold the barley upon the market and brought this action on the contract, claiming as their measure of damages the difference between the contract price and the value of the barley in the market on the day when it was to have been delivered by the terms of the contract. It was claimed on the part of the appellants that in case of such a contract of sale for future delivery, where, before the time of delivery, the buyer gives the seller notice that he will not receive the property and comply with the terms of the contract, this, whether the seller assents thereto or not, creates a breach of the contract, or, at all events, imposes the legal duty on the seller to thereafter take such steps with reference to the subject of the contract as shall most effectually mitigate the damages to be paid by the buyer in consequence of the breach, without imposing loss upon the seller. But the court held that a buyer cannot thus create a breach, before the time for performance arrives, upon which the seller is bound to act, and if the buyer's dec. laration is ineffectual to create a breach it follows that the seller is under no obligation to regard it for any purpose. 'Nothing would seem to be plainer," say the court, "than that, while the contract is still subsisting and unbroken, the parties can only be compelled to do that which its terms require. This contract imposed no duty upon appellees to make other contracts for January delivery, or to sell barley in December, to protect appellants from loss. It did not even contemplate that appellees should have the barley
ready for delivery until such time in January as they should elect. If appellees had then the barley on hand, and had acted upon appellants' notice, and accepted and treated the contract as then broken, it would. doubtless, then have been their duty to have resold the barley upon the market, precisely as they did in January, and have given appellants credit for the proceeds of the sale; but it is obviously absurd to assume that it could have been appellees' duty to have sold barley in December to other parties which it was their duty to deliver to appellants, and which appellants had a legal right to accept in January."
In Roebling's Sons Co. v. Lock Stitch Fence Co. (1889), 130 Ill. 660, 22 N. E. R. 518, supra, a contract was made between appellant and appellee, by the terms of which the former agreed to sell to the latter five hundred tons of fence-wire, and to deliver the wire so sold between March 7, 1885, and July 1, 1885. On April 29th the appellee definitely repudiated the contract by telegraphing appellant that no more wire would be taken even if it were shipped. The appellant, however, refused to relinquish the contract, and proceeded with the manufacture and tender of the residue of the wire. The court held that the appellant had a right to do so, and to hold the appellee responsible for refusal to accept tender. "Where one party to a contract," said the court, "gives notice, before the time of performance arrives, that he does not intend to perform, the other party may treat such notice as a breach and
still in force, he will do so, as has been seen,' for the benefit of The latter will, in general, be entitled to
the buyer as well.
bring his action; or he may decline to accept such notice as a breach, and may insist that the contract shall continue in force up to the time fixed for its final performance, holding the party refusing to perform responsible for the consequences of such refusal. One party to a contract cannot, by simply refusing to carry out his part of it, compel the other party to rescind it."
In Roth & Co. v. Taysen & Co. (1896) [Q. B. Div.], 73 Law Times Reports, 628, the plaintiffs had contracted to sell to defendants a cargo of maize, to be shipped from South America according to certain specifications. It was expected to arrive, and actually did so, on September 5th. On the 28th of May preceding, there being a declining market, the buyers telegraphed the sellers repudiating the contract. An unsuccessful attempt was made to arbitrate, and on the 24th of July the plaintiffs brought this action. The court held that damages were to be estimated on the basis of the market value of the maize on July 24th, and not in accordance with the market value on September 5th, when the goods were actually resold. The sellers had treated the repudiation as a wrongful ending of the contract by bringing their action, and the buyers were entitled to have their loss mitigated by any reasonable means that a prudent man ought to have adopted. Since the market value was still falling, an immediate resale should have been made, and the defendants' loss
should not be increased by the plaintiffs' neglect.
In Zuck v. McClure (1881), 98 Pa. St. 541, the plaintiff had made two contracts with the defendants, the first an executed contract and the second a contract for future delivery. Suit was brought on the first, for the price of coke sold and delivered, and the defendants set up a breach of the second as a counter-claim. The second contract called for the delivery by the plaintiff to the defendants of all coke burned in the plaintiff's furnaces during a certain time. The plaintiff informed the defendants that he would not fulfill his contract, but the defendants refused to consider the contract broken and notified the plaintiff that they were prepared to receive the coke under the contract. The action on the first contract, to which this alleged breach of the second is interposed as a counter-claim, was commenced on November 29th, the refusal of plaintiff to perform the second contract was given on November 19th, and the defendants' insistence upon compliance was made on December 4th. The court held that on November 29th, when this action was commenced, there was no breach of the second contract, since the defendants had not accepted the plaintiff's notice of breach, such notice being a mere matter of intention and subject to withdrawal until accepted by the other party as a present breach.
In Marks v. Van Elghen (1898, U. S. App.), 85 Fed. R. 853, 30 C. C. A. 208, a contract had been made
1 See ante, § 1090.