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of the rule would reach those cases, already dealt with, in which the loss of differences in value is the usual and ordinary result.'

The second branch will extend to all those cases in which both parties, at the time they made the contract,' can fairly be said to have had within their contemplation some special loss or injury which would probably result to the buyer from the failure to obtain the goods, and in which that loss so contemplated has, in fact, naturally and proximately resulted from such failure.

$ 1761. Loss of profits on resale contracted for.- The case of the vendee who is seeking to recover damages for the loss of profits which he might have made upon a resale of the goods furnishes a typical instance of the application of the rule.

If the purchaser intended to resell the goods in the market, but had not in fact contracted for their resale; or if he had contracted to resell them, but at the market price, then the usual rule of the difference between the contract and the market price furnishes an adequate remedy. But, supposing that the vendee bought the goods for resale in a particular market, or had actually made a contract for their resale at more than the market price, and loses the benefit or profit he might so have made, how then are his damages to be estimated ?

$ 1762. - Resale not contemplated.- Applying here the rules above laid down, the result will be that if the seller had,

1 See ante, SS 1736 et seq.

dale, supra; Griffin v. Colver, supra, 2 It is, of course, essential that both and many other cases. parties shall have contemplated the 3 The notice or knowledge which is possible injury. The buyer's knowl. to affect the seller must also, of edge is not alone enough; it must ap- course, have been had when the conpear that the seller also can fairly and tract was made, and no subsequent reasonably be said to have the pos- disclosure of possible or probable but sible injury within his contempla unusual results can affect his liabiltion. Horne v. Midland Ry. Co. (1871), ity. Jordan v. Patterson (1896), 67 L. R. 7 C. P. 583, Mechem's Cases on Conn. 473, 35 Atl. R. 521, Mechem's Damages (2d ed.), 124; Mather v. Cases on Damages, 242; Coffin v. American Express Co. (1881), 138 Mass. State (1895), 144 Ind. 578, 43 N. E. R. 55, 52 Am. R. 258, Mechem's Cases 651; Penn v. Smith (1894), 104 Ala. on Damages, 135; Hadley v. Baxen- 445, 18 S. R. 38.

at the time he made the contract to sell, no knowledge or notice that the goods were being purchased for resale in a particular market or to be supplied under an existing contract for their resale at a particular price, no damages based upon the loss of that particular market or of the profit under that particular contract can be recovered. The buyer must here content himself with the damages which may be estimated upon the basis of the general market or the actual value. A resale at a particular profit is not so far the usual and the natural result, even when goods are known to be purchased for resale, as to bring it within the first branch of the rule of Hadley v. Baxendale.?

$ 1763. Resale known to vendor.- If, however, at the time the contract is made, the seller has such notice or knowledge that the goods are being purchased for resale in a particular market, or to be supplied in pursuance of a particular contract, that he may fairly and reasonably be deemed to have made his contract in contemplation of that purpose, and to have assumed the risks thereby entailed, then, if he breaks his contract, damages for losses caused thereby, if not uncertain or remote, may be recovered.?

1 Williams v. Reynolds (1865), 6 Best made until a later time. Coffin F. & Smith, 495; Coffin v. State (1895), State, supra, 144 Ind. 578, 43 N. E. R. 654; Jordan 2 Williams v. Reynolds, supra; Thol v. Patterson (1896), 67 Conn. 473, 35 v. Henderson (1881), 8 Q. B. Div. 457. Atl. R. 521, Mechem's Cas. on Dam- 3 Hydraulic Engineering Co. v. Mo ages (2d ed.), 242; Devlin v. Mayor of Haffie (1878), 4 Q. B. Div. 670: Gré New York (1875), 63 N. Y. 8; Moffitt- bert-Borgnis v. Nugent (1883), 15 Q. West Drug Co. v. Byrd (1899), – U. S. B. Div. 85; Robinson v. Hyer (1895), App. — 34 C. C. A. 351, 92 Fed. R. 35 Fla. 544, 17 S. R. 745; Penn 5. 290; Orr v. Farmers' Alliance Co. Smith (1894), 104 Ala. 445, 18 S. R. 38 (1895), 97 Ga. 241, 22 S. E. R. 937; [citing Bell v. Reynolds, 78 Ala 511, Cockburn v. Ashland Lumber Co. 56 Am. R. 52; Young v. Cureton. 87 (1882), 54 Wis. 619, 12 N. W. R. 49; Ala. 727); Messmore v. New York Fox v. Harding (1851), 7 Cush. (Mass.) Shot Co. (1869), 40 N. Y. 422; Wake 516; Rahm v. Deig (1889), 121 Ind. 283, man v. Wheeler & Wilson Mfg. Co 23 N. E. R. 141; Barker v. Mann (1886), 101 N. Y. 205, 54 Am. R. 676; (1869), 5 Bush (Ky.), 672, 96 Am. Dec. Jordan v. Patterson (1896), 67 Coon. 373. Certainly this must be true 473, 33 Atl. R. 521, Mechem's Cases where the contract for resale is not on Damages (2d ed.), 242; Ca.mpbells

- $ 1764. -As stated in a leading case, the ordinary rule “is changed when the vendor knows that the purchaser has an existing contract for a resale at an advance price, and that the purchase is made to fulfill such contract, and the vendor agrees to supply the article to enable him to fulfill the same; because those profits which would accrue to the purchaser upon fulfilling the contract of resale may justly be said to have entered into the contemplation of the parties in making the contract. This rule is based upon reason and good sense, and is in strict accordance with the plainest principles of justice. It affirms nothing more than that, where a party sustains a loss by reason of a breach of a contract, he shall, so far as money can do it, be placed in the same situation with respect to damages as if the contract had been performed.”

$ 1765. — It is sometimes objected that a loss of profits is not a proper subject of compensation, and this is often true. It is not, however, because profits in themselves may not, if lost, be properly made the basis of a recovery, but because in most cases in which such a claim is made the profits in question were too speculative, uncertain or remote to be considered. Where, on the other hand, the loss of profits can be shown with reasonable certainty, it has been settled, since the case of Masterton v. Mayor of Brooklyn, that a recovery may be bad for the amounts so lost.

$ 1766, Extent of knowledge required — Particular price. If, when the contract of sale is made, the seller knows not only of the fact of the resale, but also of the particular price to be received upon it, there can usually be but little difficulty in holding him responsible upon the basis of that

ville Lumber Co. v. Bradlee (1895), 96 Dec. 38, Mechem's Cases on DamKy. 494, 29 S. W. R. 313; Carpenter ages (2d ed.), 141. See also the full v. First Nat. Bank (1887), 119 Ill. 352; discussion in Wakeman v. Wheeler & Barker v. Mann (1869), 5 Bush (Ky.), Wilson Mfg. Co. (1886), 101 N. Y. 205, 672, 96 Am. Dec. 373.

54 Am. R. 676; Bluegrass Cordage 1 Messmore v. N. Y. Shot Co., supra. Co. v. Luthy (1896), 98 Ky. 583, 33 S. 2 (1845) 7 Hill (N. Y.), 61, 42 Am. W. R. 835.

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particular price. If, however, though he knows of the fact of the resale, he does not know the price, he could not be held liable upon the basis of the particular price if it were unusual or extravagant. He must, nevertheless, be held to contemplate that the resale is to be at a fair and reasonable profit at least, and, if he knows that the article is not one which has a market price, he may be held liable upon the basis of the contract price, if that is not such as to yield an unreasonable or unfair profit.'

See Trigg v. Clay (1891), 88 Va. 330, rouble a day, amounting in the 13 S. E. R. 434, 29 Am. St. R. 723, whole to 1001. The plaintiffs, having Mechem's Cases on Damages, 239. brought an action against the deCompare Booth v. Rolling Mill Co. fendant for the delay, sought to (1875), 60 N. Y. 487, Mechem's Cases, recover as damages the 1001 Held, 132. In Elbinger Actien-Gesellschafft that the plaintiffs were not entitled v. Armstrong (1874), L. R. 9 Q. B. 473, to damages, as matter of right, to the the defendant, in January, 1872, amount of penalties; but that the agreed to furnish plaintiff with six jury might reasonably have assessed hundred and sixty-six sets of wheels the damages at that amount. and axles according to tracings, one In Grébert-Borgnis v. Nugent hundred of which were to be deliv. (1885), 15 Q. B. Div. 85, the defendants ered at stated intervals in the months contracted with the plaintiff to de of February, March and April free on liver goods to him of a particular board at Hull; guarantee three years shape and description at certain and three months from time of ship- prices and by instalments at differments. The plaintiffs were under a ent times. When the contract was contract with a Russian railway com- made the defendants knew that, erpany to deliver them one thousand cept as to price, it corresponded with wagons, five hundred on the 1st of and was substantially the same as a May, 1872, and five hundred on the contract wbich the plaintiff had en31st of May, 1873; and they were tered into with a French customer of bound to pay two roubles per wagon his, and that it was made in order to for each day's delay in delivery. In enable the plaintiff to fulfill such the course of the negotiations be- last-mentioned contract. The de tween plaintiffs and defendant, fendants broke their contract, and, defendant was informed of this con- there being no market for the goods tract, but neither the precise day for of the description contracted for, the the delivery nor the amount of the plaintiff's customer recovered dam. penalties was mentioned. Delay oc- ages against him in the French court curred in the delivery of the one to the amount of 281. Held, in an hundred sets of wheels; and the action against the defendants for plaintiffs in consequence had to pay their breach of contract, that the certain penalties, but the Russian plaintiff was not only entitled to recompany consented to take one

cover as damages the amount of

§ 1767. Ordinarily, it is said, the price to be received upon the resale “would, presumptively, be held to be a reasonable price; but if the facts in any given case are such as to show such price to yield an extravagant or extraordinary profit,” the seller will not be bound in absence of knowledge of it; "and, in order to assess the damages, the court must be put in possession of sufficient evidence to enable it to arrive at a conclusion in respect to what would amount to a reasonable profit on the transaction.” 1

$ 1768. Cost of procuring substitute.- It not infrequently happens that the buyer, who has made a subcontract, will endeavor, in order to diminish his own liability to his subvendee, to obtain and supply something in lieu of that which his vendor has failed to furnish as agreed. Such an endeavor is to be commended, and if the buyer, acting in good faith and

profit he would have made had be of proof that the price plaintiff was been able to fulfill his contract with to receive was extravagant or of an his customer, but also damages in unusual or exceptional character, he respect of his liability to such cus- was entitled to recover as damages tomer, and that in estimating such the profits he would have realized; last-mentioned damages the 28h. and that the fact that the price was which the French court had given not communicated to defendant (it might be treated as not an unreason- appearing that the rails were a new able one at which such damages article, not having a market value) might be assessed. The case of El. did not change the rule of damages. binger Actien-Gesellschafft v. Arm- In Guetzkow v. Andrews (1896), 92 strong (L. R. 9 Q. B. 473) was approved. Wis. 214, 66 N. W. R. 119, it is held

In Booth v. Spuyten Duy vill Roll- that where a vendor is informed that ing Mill Co. (1875), 60 N. Y. 487, his vendee is buying for resale under Mechem's Cases on Damages (2d ed.), an existing contract, and delivers 132, plaintiff having contracted to goods not as agreed, which have no sell and deliver to the N. Y. C. R. R. market value, and which the vendee Co. four hundred tons of rails, made delivers to his vendee without being of iron with steel caps, contracted able to obtain the stipulated price with defendant to furnish the caps, therefor, the vendor is bound by the the latter being informed for what price his vendee was to receive, purposes they were wanted. In con- whether he knew it or not, unless it sequence of defendant's failure to is so great as to yield an extraordi. perform, plaintiff was unable to per- nary profit. form his contract. In an action for 1 Guetzkow v. Andrews, supra. the breach, held, that in the absence

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