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Breach of agreement to purchase.

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Cannon Ball

Junior Member
Michigan.
Hi.
Hope to find out if I would have a case for breach of agreement (contract.)
Quick recap. Contacted a business regarding an online listing for a Rec. Vehicle (not motorized.) Had a number of contacts with sales rep. with business to finallize an agreement to purchase item. Agreed on price, doc fees, permit, and delivery charges as well as a tentative delivery date pending prep. of vehicle for delivery. Terms were agreed on and Visa number given for deposit to purchase. Paper work was to be completed by sales person and forwarded but due to techical issues at business, paper work was not sent right away. Contacted sales rep. and was informed paper work would be sent out the following morning. Visa deposit for $1000. was put through. That evening the item was sold via on line auction. The business has elected to sell to the online purchaser as they feel that the transaction was fully completed where as my earlier transaction was not. An oral agreement was made to purchase and agreed apon between myself and sales rep. A deposit was collected. Issue was that sales rep. failed to remove from inventory list or from online auction. This resulted in second sale. Would I have a case for breech of contract? The RV was priced substantially lower then other similar items. Could I sue for the difference in market value and agreed purchase price? What about for my time consumed in the initial dealing and follow up to try and resolve the issue.

Thank you for your advice.
 


BoredAtty

Member
I disagree with seniorjudge's analysis of damages for breach of contract.

When a breach of contract occurs, the non-breaching party is entitled to the benefit of the bargain. Therefore, when the seller breaches a sales contract, the buyer's damages are the difference between the contracted sales price of the item and the price of a substitute item purchased elsewhere.
 

Cannon Ball

Junior Member
Is anyone familiar if the oral agreement that was made for the purchase would be binding in the State of Michigan. The written purchase agreement was never sent to me as they went with the second purchaser and then refunded my deposit.

Thanks.
C.B.
 

seniorjudge

Senior Member
Is anyone familiar if the oral agreement that was made for the purchase would be binding in the State of Michigan. The written purchase agreement was never sent to me as they went with the second purchaser and then refunded my deposit.

Thanks.
C.B.
If you want to resolve the two conflicting views of your problem, hire a lawyer ($10K if cheap) and file a lawsuit (3 years if quick).

Post back with results.
 

Cannon Ball

Junior Member
Thanks for stating reality!!

Just trying to find out if I would have a case or not.
They have offered an alternative that does not really suit my needs and will cost me addition money with no finacial impact to them.
They have admitted to the screw up. If going to court (small claims) would create additional financial costs for them to defend themselfs then maybe they would be willing to share in some of the additional cost to me for their screw up.
They made the decission to go with the second internet auction sale as it would have had greater impact to their business reputation.
 

BoredAtty

Member
Is anyone familiar if the oral agreement that was made for the purchase would be binding in the State of Michigan. The written purchase agreement was never sent to me as they went with the second purchaser and then refunded my deposit.

Thanks.
C.B.
A verbal contract for the sale of goods over $500 can be enforced if the party seeking to enforce the contract has partially performed. Since you paid $1000 towards the price, I think you have a strong argument that you partially performed.

I'm not sure whether you actually had a contract, as it's possible that the parties did not intend the agreement to be binding until after the papers were signed. Given that the deposit was accepted, however, it sounds like signing the papers was a mere formality.

A quick review of the applicable law should resolve any questions as to remedies in breach of contract cases:


440.2712 Cover; procurement of substitute goods; buyer's damages.

Sec. 2712.

(1) After a breach within the preceding section the buyer may “cover” by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.

(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (section 2715), but less expenses saved in consequence of the seller's breach.

(3) Failure of the buyer to effect cover within this section does not bar him from any other remedy.​



440.2713 Nondelivery or repudiation; buyer's damages.

Sec. 2713.

(1) Subject to the provisions of this article with respect to proof of market price (section 2723), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this article (section 2715), but less expenses saved in consequence of the seller's breach.

(2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.​


In addition to the clearly stated Michigan law above, a quick 30 second search led me to numerous Michigan cases which provided that the "remedy for breach of contract is to place the nonbreaching party in as good a position as if the contract had been fully performed." Note that "as if the contract had been fully performed" clearly does not mean "as if the contract had not taken place."
 
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Cannon Ball

Junior Member
We discussed all terms of sale (price, doc. fee, transit permit fee, delivery charges to my desired pickup location) as well as a tentative delivery date as long as they were able to get the trailer in for predelivery inspection on Monday (sale date was on Friday).
The sales person then requested a $1000. deposit which I provided a Visa number for. They charged this amount to my Visa later that day. The sales person was to send the contract documents by means of scanning them and emailing to me. He was not able to get the scanner to work. I had contacted him to inform that I did not receive the paper work shortly after making the deal. He said that he needed to talk to their Tech person and would send the documents in the morning. I asked if this was an issue and was told that it would not be. The second sale was initiated by online auction "Buy it now" later that evening. When they decided to go with the second buyer that next day they refunded my deposit. They sent me copies of both Visa transactions (debit and credit) as well as a scan of the cover sheet of the contract the next day. I will have phone records to show times of contact. The sales manager has also verified sequence of events verbally as well.
They have since offered to sell me another trailer at dealer cost plus shipping charges. This will cost me several thousand more then the first deal for a trailer that is somewhat close to what I wanted. That sales manager has also confirmed that an error was made by the sales person not removing the item from the online auction but stated that the owners want to honor the online contract.
Let me know what you think. Is it worth it to seek damages. Do I have a strong enough case for breach of agreement/contract.
 

BoredAtty

Member
Is it worth it to seek damages. Do I have a strong enough case for breach of agreement/contract.
Only you can decide if it's worth seeking damages since it depends on the (monetary) point at which you are willing to walk away. How much were you damaged (i.e. what is the difference between the market price of the RV and the contract price)? As seniorjudge pointed out, it could cost quite a bit to hire an attorney, and it could take quite a while to win a suit. On the other hand, one simple letter from an attorney could prompt the seller to make it right.

It may be worthwhile to contact the manager (via mail) and embellish a bit. Tell him that you've spoken to an attorney and that his opinion is that a contract was formed, that it was breached, and that you are entitled to damages. You may even want to cite the law I posted. See where that gets you. If you get nowhere, then you may want to spend a couple hundred bucks to consult with a local attorney and get his opinion.

Good luck.
 

Cannon Ball

Junior Member
Thanks for the feed back.
This was my thoughts as well.
Damages are a min. of $5000. more likely towards $7000. (excluding any accured legal costs) as the only other comparisons that I have found are a lot further away and would require further shipping charges to get it to the agreed on location.

I am sending a letter to the owners stating my position with reference to the points of law that you qouted.
Thank you again for taking the time to pass this information.
I will post with any updates.
C.B.
 

Zigner

Senior Member, Non-Attorney
Thanks for the feed back.
This was my thoughts as well.
Damages are a min. of $5000. more likely towards $7000. (excluding any accured legal costs) as the only other comparisons that I have found are a lot further away and would require further shipping charges to get it to the agreed on location.

I am sending a letter to the owners stating my position with reference to the points of law that you qouted.
Thank you again for taking the time to pass this information.
I will post with any updates.
C.B.
Nonono - how much did the vehicle ACTUALLY sell for? (I'm assuming it was more than what you offered.) The difference would be your damages. If they sold it for less, that's pretty clear proof of the value of the vehicle.
 

BoredAtty

Member
Nonono - how much did the vehicle ACTUALLY sell for? (I'm assuming it was more than what you offered.) The difference would be your damages. If they sold it for less, that's pretty clear proof of the value of the vehicle.
That's not actually how it works.

Assuming there was a breach of contract, the OP could buy the same model RV elsewhere for a reasonable price, and he would then be entitled to the difference between what he actually paid and what he would have paid pursuant to the contract.

If the OP does not buy a substitute RV, then the OP would be entitled to the difference between the market value of the RV and what he would have paid pursuant to the contract.

Contract law attempts to put the non-breaching party in the same position he would have been had the contract not been breached. Therefore, the actual selling price of the original item is not necessarily a factor.
 
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Zigner

Senior Member, Non-Attorney
That's not actually how it works.

Assuming there was a breach of contract, the OP could buy the same model RV elsewhere for a reasonable price, and he would then be entitled to the difference between what he actually paid and what he would have paid pursuant to the contract.

If the OP does not buy a substitute RV, then the OP would be entitled to the difference between the market value of the RV and what he would have paid pursuant to the contract.

Contract law attempts to put the non-breaching party in the same position he would have been had the contract not been breached. Therefore, the actual selling price of the original item is not necessarily a factor.
I was basing my statement on the second point you brought up - if OP didn't purchase an RV. The "market value" would be what THAT unit sold for. So, yes, if OP can only find the same model at a higher price and purchases it, then he has demonstrated damages. Otherwise, the real indicator of value is what the model sold for.
 

tranquility

Senior Member
I agree with BoredAtty in detail, but point out that it is difficult to find a market price for a used item. To calculate the fmv of a used item, zinger's point about how much the vehicle sold for is valid. An arms-length sale soon after the breach is a good proof of value.
 

BoredAtty

Member
if OP didn't purchase an RV. The "market value" would be what THAT unit sold for.
In some limited circumstances that may be the case, but that is far from the rule.

'The general baseline adopted in this section uses as a yardstick the market in which the buyer would have obtained cover had he sought that relief.' - U.C.C. Comment 1

Thus, if the OP's cost for a reasonable substitute would be $10k more than the contract price, then $10k is his damages even if he does not purchase the substitute. The selling price of the original RV is not a factor in that equation.
 

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