(1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

(2) Consequential damages resulting from the seller's breach include:

(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty.

History: 1953 Comp., § 50A-2-715, enacted by Laws 1961, ch. 96, § 2-715.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior uniform statutory provisions. — Subsection (2) (b) - Sections 69(7) and 70, Uniform Sales Act.

Changes. — Rewritten.

1. Subsection (1) is intended to provide reimbursement for the buyer who incurs reasonable expenses in connection with the handling of rightfully rejected goods or goods whose acceptance may be justifiably revoked, or in connection with effecting cover where the breach of the contract lies in non-conformity or non-delivery of the goods. The incidental damages listed are not intended to be exhaustive but are merely illustrative of the typical kinds of incidental damage.

2. Subsection (2) operates to allow the buyer, in an appropriate case, any consequential damages which are the result of the seller's breach. The "tacit agreement" test for the recovery of consequential damages is rejected. Although the older rule at common law which made the seller liable for all consequential damages of which he had "reason to know" in advance is followed, the liberality of that rule is modified by refusing to permit recovery unless the buyer could not reasonably have prevented the loss by cover or otherwise. Subparagraph (2) carries forward the provisions of the prior uniform statutory provision as to consequential damages resulting from breach of warranty, but modifies the rule by requiring first that the buyer attempt to minimize his damages in good faith, either by cover or otherwise.

3. In the absence of excuse under the section on merchant's excuse by failure of presupposed conditions, the seller is liable for consequential damages in all cases where he had reason to know of the buyer's general or particular requirements at the time of contracting. It is not necessary that there be a conscious acceptance of an insurer's liability on the seller's part, nor is his obligation for consequential damages limited to cases in which he fails to use due effort in good faith.

Particular needs of the buyer must generally be made known to the seller while general needs must rarely be made known to charge the seller with knowledge.

Any seller who does not wish to take the risk of consequential damages has available the section on contractual limitation of remedy.

4. The burden of proving the extent of loss incurred by way of consequential damage is on the buyer, but the section on liberal administration of remedies rejects any doctrine of certainty which requires almost mathematical precision in the proof of loss. Loss may be determined in any manner which is reasonable under the circumstances.

5. Subsection (2) (b) states the usual rule as to breach of warranty, allowing recovery for injuries "proximately" resulting from the breach. Where the injury involved follows the use of goods without discovery of the defect causing the damage, the question of "proximate" cause turns on whether it was reasonable for the buyer to use the goods without such inspection as would have revealed the defects. If it was not reasonable for him to do so, or if he did in fact discover the defect prior to his use, the injury would not proximately result from the breach of warranty.

6. In the case of sale of wares to one in the business of reselling them, resale is one of the requirements of which the seller has reason to know within the meaning of Subsection (2) (a).

Point 1: Section 2-608.

Point 3: Sections 1-203, 2-615 and 2-719.

Point 4: Section 1-106.

"Cover". Section 2-712.

"Goods". Section 1-201.

"Person". Section 1-201.

"Receipt" of goods. Section 2-103.

"Seller". Section 2-103.

Emotional damages. — "Injury to person or property" contemplates physical injury. The UCC uses injury to cover remediable harm to both people and property. Such personal injury damages might be non-economic damages, but they would not be emotional damages. Emotional damages are unavailable for breach of warranty under the UCC. Pedroza v. Lomas Auto Mall, Inc., 625 F. Supp. 2d 1156 (D.N.M. 2009).

Mitigating damages. — Plaintiff did not need to present evidence that he could avoid consequential damages by renting or buying a substitute machine. The evidence indicated that plaintiff took reasonable steps to prevent consequential damages and those reasonable steps eventually resulted in lost profits giving rise to the consequential damage award. Manouchehri v. Heim, 1997-NMCA-052, 123 N.M. 439, 941 P.2d 978.

Buyer may recover purchase price and incidental damages. — A buyer, who rightfully rejects or justifiably revokes acceptance of goods, has the right not only to rescind and recover back the purchase price paid, but, in addition, the right to recover incidental damages resulting from the seller's breach, including expenses reasonably incurred in the care and custody of such goods. Grandi v. LeSage, 1965-NMSC-017, 74 N.M. 799, 399 P.2d 285.

Failure to timely furnish materials. — The highway department assessed a contractor $21,000 in liquidated damages for its delay in completing a project. The liquidated damage provision had been incorporated in a purchase order agreement between the contractor and a supplier, and the damages had resulted from the supplier's failure to timely furnish materials. This was a proper case, in a later suit against the supplier, for an award of consequential damages. State ex rel. Concrete Sales & Equip. Rental Co. v. Kent Nowlin Constr., Inc., 1987-NMSC-114, 106 N.M. 539, 746 P.2d 645.

Law reviews. — For article, "New Mexico's 'Lemon Law': Consumer Protection or Consumer Frustration?", see 16 N.M.L. Rev. 251 (1986).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 22 Am. Jur. 2d Damages §§ 456 to 459; 63A Am. Jur. 2d Products Liability § 967 et seq.

Right of dealer against his vendor in case of breach of warranty as to article, 22 A.L.R. 133, 64 A.L.R. 883.

Loss of profits as element of damages for fraud of seller as to quality of goods purchased for resale, 28 A.L.R. 354.

Loss of anticipated profits as damages, 32 A.L.R. 120.

Loss of or damage to crop as element of damages for breach of contract of sale or warranty of agricultural machinery or fertilizer, 69 A.L.R. 748.

Use of article by buyer as waiver of right to rescind for fraud, breach of warranty or failure of goods to comply with contract, 77 A.L.R. 1165, 41 A.L.R.2d 1173.

Liability of seller for special damages based on resale by buyer, as affected by his knowledge or ignorance of the resale, 88 A.L.R. 1439.

Damages for breach of warranty, 130 A.L.R. 753.

Buyer's return of subject of sale and acceptance of return of or credit for the purchase price as affecting right to recover special damages for breach of warranty, 157 A.L.R. 1077.

Interest as element of damages recoverable in action for breach of contract for the sale of a commodity, 4 A.L.R.2d 1388.

Right to recover, in action for breach of contract, expenditures incurred in preparation for performance, 17 A.L.R.2d 1300.

Recovery for loss of good will occasioned by use of unfit materials, 28 A.L.R.2d 591.

Privity of contract as essential to recovery in action based on theory other than negligence, against manufacturer or seller of product alleged to have caused injury, 75 A.L.R.2d 39.

Prospective buyer's release of prospective seller from liability for injuries resulting from trial use or inspection of product for sale, 93 A.L.R.3d 1296.

Measure of damages in action for breach of warranty of title to personal property under UCC sec. 2-714, 94 A.L.R.3d 583.

Buyer's incidental and consequential damages from seller's breach under UCC § 2-715, 96 A.L.R.3d 299.

Extent of liability of seller of livestock infected with communicable disease, 14 A.L.R.4th 1096.

Bystander recovery for emotional distress at witnessing another's injury under strict products liability or breach of warranty, 31 A.L.R.4th 162.

Damages for breach of contract as affected by income tax considerations, 50 A.L.R.4th 452.

77A C.J.S. Sales § 400 et seq.