Jones entered into a contract to purchase a 1957 Edsel automobile from Smith for $2000. Unknown to Smith, Jones had an opportunity to resell that car for $5000 to Brown, who wanted to use it as a prop in a movie being shot in town. Before the car was delivered and payment made, it was destroyed by fire when one of Smith's employees carelessly spilled a can of gasoline in the garage where the car was kept. If the court found that the normal market value for such a vehicle was only $3000, which of the following statements is correct with respect to the appropriate remedy that should be awarded by the court for such a breach of contract?

A) Because of the uniqueness of the vehicle, the court should award specific performance.
B) In these circumstances, the court should award $5000, representing the lost profits.
C) In these circumstances, there should be no remedy since the contract has been frustrated.
D) The court should award only $1000, the difference between the market price and the purchase price.
E) The court could award $3000.

Question

Isabel Pulgarin · Accepted Answer

Final Answer : D, Explanation :  The appropriate remedy in a case involving the breach of a contract for the sale of goods (like the 1957 Edsel automobile) is typically the difference between the contract price and the market value of the goods at the time of the breach. Since the contract price was $2000 and the market value was $3000, the difference is $1000. This measure aims to put the buyer (Jones) in the position they would have been in had the contract been fulfilled. Options involving specific performance or lost profits are generally not applicable in this context, and the contract has not been frustrated in a legal sense that would preclude all remedies.

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