Neri v. Retail Marine Corp. (285 N.E.2d 311 (N.Y. 1972)) is the leading case for determining breech of contract damages to lost volume sellers. However, sometimes it isn’t as cut and dry as Neri would lead one to believe. For example, in the case of R.E. Davis Chemical Corp v. Diasonics(826 F.2d 678 (7th Cir. 1986), 924 F.2d 709 (7th Cir. 1991)), a trial was needed to establish that the plaintiff had the capacity to make an additional sale (since the goods were pretty rare), and that it would have been profitable for the plaintiff to have made a second sale.
- Basically, R.E. Davis stands for the proposition that sometimes it is not clear if a seller is indeed a lost volume seller. It’s important to remember that although UCC §2-708(2) allows for recovery for lost volume sellers, the fact that the sale is indeed lost volume needs to be established.
- Since the extra legal expenses required to establish the damages can be greater than the actual damages, it sometimes makes no sense to have a trial. Neri tried to remedy that by making the assumption that you are a lost volume seller if you are in business.
- That simplifies the system, even if it isn’t always technically correct.
- Courts tend to be very sympathetic to the Neri decision, but they don’t blindly follow it.
- Common law courts often take a similar stance, even in cases that don’t fall under the UCC (e.g. a house owner who breaches a contract with a housepainter).