Exercise 8

Jeff makes a contract with Acme Farms to buy 1000 apples for $200, which is the average price for apples at that time. The contract specifies that Jeff must have the apples by April 2 so that he can make his specialty apple pies to sell to Yummy Bakery. On March 15, Acme Farms informs Jeff that they will not be able to meet his order. On April 4, Jeff files suit against Acme Farms for breach of contract and wins the case. Jeff asks for consequential damages that will reimburse him for the amount of profit that he would have been paid by Yummy Bakery if he had been able to make his apple pies. Acme presents evidence proving that Jeff had not even tried to find substitute apples, even though he had sufficient time before his deadline and there were other farms nearby that could have supplied him with apples for the same $200 price.

How should the judge rule?

A. Jeff should not recover any damages because he did not look for another apple supplier.

Sorry, but that's not the correct answer. Please select another.

B. Jeff can recover damages, but such recovery should be reduced by the amount that he could have avoided if he had tried to buy his apples elsewhere.

The correct answer is B. Jeff had a duty to mitigate his damages by looking for a new apple supplier. His failure to use reasonable diligence to mitigate his damages means that the amount of damages he recovers should be reduced by the amount that might have been avoided by mitigation. The duty to mitigate only reduces recovery; it does not prohibit recovery. Note however, that even though recovery is not prohibited, in this case Jeff could have avoided all loss by going to another apple supplier. Since Jeff could have avoided the loss entirely, his recovery will be reduced to zero.

C. Jeff should get full damages that include the amount that he would have been paid by Yummy Baker for his apple pies.

Sorry, but that's not the correct answer. Please select another.