Document Type
Working Paper
Publication Date
2018
Abstract
If a buyer breaches a contract but the market price has remained unchanged, English courts and the treatises have treated the seller as a “lost volume seller.” The seller, it is argued, could have had two sales, not one, so it lost the profit on the second sale. This paper recognizes that the buyer has an option to terminate and that the contract prices that option. The implicit option price of the lost volume remedy results in an absurd contract, setting the option price high when it should be low and vice versa. The default rule ought to be the contract-market differential (zero in these cases) with the parties determining the appropriate option price with a nonrefundable deposit or liquidated damages.
Disciplines
Contracts | Law | Law and Economics
Recommended Citation
Victor P. Goldberg,
The Lost Volume Seller in English Law,
Columbia University School of Law, The Center for Law & Economic Studies Working Paper No. 594
(2018).
Available at:
https://scholarship.law.columbia.edu/faculty_scholarship/2325