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Keywords

contractbreach of contractdamagescorporationgood faith
contractbreach of contractplaintiffdamagesappealcorporation

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Cives Corp. v. Callier Steel Pipe & Tube, Inc., 482 A.2d 852, 39 UCC Rep.Serv. 1705

Facts

In late 1977, Cives Corporation was contracted to provide structural steel for a Georgia-Pacific plant, with a delivery deadline of January 23, 1978. Cives ordered steel tubes from Callier, which were to be delivered by January 3, 1978, but Callier failed to deliver on time, leading Cives to cancel the order and produce the tubes in-house. Cives incurred significant costs in this process and sought damages for the breach of contract.

In late 1977 Georgia-Pacific Corporation was seeking bids for the construction of a tissue products plant in Plattsburg, New York. As a result of its low bid, Cives was given the contract to provide the structural steel for part of the roof of this plant.

Issue

Did Cives have a valid claim for damages, including overhead expenses, due to Callier's breach of contract?

Cives appeals the court's denial of damages for certain overhead expenses and Callier cross-appeals the breach of contract award.

Rule

Under 11 M.R.S.A. § 2–712, a buyer may recover damages for the difference between the cost of cover and the contract price, along with any incidental or consequential damages, but must prove entitlement to any claimed overhead expenses.

Under 11 M.R.S.A. § 2–712, a buyer may recover damages for the difference between the cost of cover and the contract price together with any incidental or consequential damages …, but less expenses saved in consequence of the seller's breach.

Analysis

The court found that Cives acted in good faith in seeking cover after Callier's failure to deliver. It ruled that while Cives was entitled to recover the costs incurred in producing the tubes, it did not prove that the overhead expenses were directly attributable to the cover project, as there was no evidence that Cives lost other work opportunities due to the cover.

The record supplies sufficient evidence to rebut Callier's contention that Cives was not justified in producing the goods in-house. Cives did not resort to in-house cover, until after conducting a thorough search for an alternate supplier.

Conclusion

The court affirmed the judgment in favor of Cives for the cost of cover but denied the claim for overhead expenses, concluding that Cives had not demonstrated entitlement to those costs.

The entry is: Appeal denied. Cross-appeal denied. Judgment of the Superior Court in favor of Plaintiff Cives Corporation on its complaint affirmed.

Who won?

Cives Corporation prevailed in the case, receiving damages for the cost of cover due to Callier's breach of contract.

Cives was entitled to “cover” for Callier's breach of contract pursuant to 11 M.R.S.A. §§ 2–711, 2–712 and 2–715, but ruled that Cives was not entitled to a pro-rata share of certain overhead expenses in connection therewith.

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