Question

Peter, a second-hand car dealer, purchased a car in the wholesale market for $15,000. Peter contracted to sell the car to David for $20,000, but David refused to take delivery of the car. Peter sued David for breach of contract.

Requirement:

1. What damages can Peter claim?

2. If Peter later sells the car to another purchaser for $18,000, what damages, if any, would Peter be entitled to?

Answer 1

1. In the above case buyer (David) has breached the contract and Peter can seek damages to a limit that puts him in the same position which would have been if David had paid. Peter can claim damages of $5000 given he can return the car to the wholesaler for the same $15000 price or the real value of the car is $15000.

2. If Peter is able to sell the car for $18000, he has a loss of $20000-18000 = $2000 due to David's breach. This is the maximum amount Peter will be entitled to.