Question

Nichole was the owner of Nicho Manufacturing Incorporated (NMI), which produced car tires. They averaged $500,000 in profits per month NMI contacted American Manufacturing Equipment (AME), which produced the main machine that made their tires, and told them that their current AME tire manufacturing machine was about to break down and she needed a new one. Nichole advised the things needed to be done quickly because $500,000 in profits a month were at stake Martha, the CEO of AME, assured Nichole that they would have a new machine out to her company within two weeks. The machine was worth $700.000 and that was the contract price for the machine that AME promised to deliver Martha later contacted Nichole and told her they would not be able to deliver the promised machine NMI's machine then broke down, and Nichole had to purchase a machine from a competitor of AME, and paid a premium for the rush" as it read better order the compethor's machine Cost NMI $800.000 NMI was down for one month total as a result of AME's breach and as a result lost $500,000 in profits. What type of damages can Nichole recover? Multiple Choice $600.000 consequential $100,000 compensatory $500.000 consequential $100.000 consequential, 5500,000 compensatory No damages, as AME did not interminal defraud NM

Answer 1

Answer :- $1,00,000 compensatory and $5,00,000 consequential

notes:

• $1,00,000 damage was was due to AME failure to perform, if Nichole have never relied on AME he would have arranged machine for $7,00,000 from somewhere else so this kind of damage is reliance damage and it should be compensated
• $5,00,000 loss of profit was due to non delivery of machine by AME, as it was foreseeable that if AME did not deliver machine it will result in loss of $5,00,000 , Nichole can bring lost profit claim.

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