Example
For example, suppose a T-shirt maker has 100 T-shirts. If a customer agrees to buy a shirt from the seller and then breaches that agreement (i.e. refuses to take delivery and pay), the seller will likely be able sell the shirt at the same price to the next customer who walks in. Such a seller has no damages by the usual measure (i.e., there is no difference between the contract price with the breaching buyer and the price paid by the buyer who subsequently bought the t-shirt).
However, if that seller has the ability to sell a shirt to any customer that walks in, then the customer who breaches the agreement to buy has prevented the seller from earning profit that the seller would have earned had the agreement been honored. The initial buyer’s breach has caused the seller to receive the profit from only one sale (the sale to the second buyer) instead of the profit from two sales (the sale to the second buyer plus the sale for which the breaching buyer contracted).
Accordingly, the T-shirt seller can recover from the breaching buyer the profit that the seller would have made on the sale of the T-shirt for which the breaching buyer contracted.
Read more about this topic: Lost Volume Seller
Famous quotes containing the word example:
“Our intellect is not the most subtle, the most powerful, the most appropriate, instrument for revealing the truth. It is life that, little by little, example by example, permits us to see that what is most important to our heart, or to our mind, is learned not by reasoning but through other agencies. Then it is that the intellect, observing their superiority, abdicates its control to them upon reasoned grounds and agrees to become their collaborator and lackey.”
—Marcel Proust (1871–1922)