Smith's of Dallas agreed to buy $10,000 worth of dresses F.O.B. Dallas from Magnifique Manufacturing Co. in New York for their October 1 Fall Showing. The cost of shipping the dresses is $300. In New York, Magnifique dresses were the rage, but the boom had not yet reached Dallas. By September 15, Smith's realized that the shop could not afford all of these dresses and called Magnifique to cancel the contract before the goods were shipped. On September 15, the market price for the dresses in New York was $9,000 and in Dallas, $5,000. On October 1, the market price had risen to $9,500 in New York and to $7,000 in Dallas. What may Magnifique do? What damages may be sought from Smith's?

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Daljeet Wadhwa · Accepted Answer

Final Answer : Magnifique may withhold delivery, cancel the contract and either resell or collect the difference between the market price at the time and place of tender and the contract price. If Magnifique resells in New York on September 15 in a reasonable commercial sale, it can ask for $700 ($10,000 - $9,000 = $1,000, less the $300 cost of shipping saved) plus whatever incidental damages are permitted.

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