American Mechanical v. Union Machine
|American Mechanical v. Union Machine|
|Court||Massachusetts Appeals Court|
|Date decided||November 18, 1985|
In October 1976, American Mechanical Corporation ("American") contracted to sell its real estate & business equipment to Union Machine Company of Lynn, Incorporated ("Union") for $135,000.
At the time of the transaction, "Union" knew that "American" was under financial pressure. Union gave American a $5,000 check to be held in escrow. 2 days later, Union stopped payment on the check. Within 2 weeks, Union decided to back out of the contract.Next, American's bank foreclosed its real estate for $55,000 & sold its equipment for $35,000.
American sued Union for breach of contract.The trial court decided in favor of American but only awarded nominal damages.
Yes. The actual loss from a breach of contract is recoverable if the loss was reasonably foreseeable or within the parties' contemplation when the contract was made.Holding was in favor of American.
(damages involving real estate) = (contract price) - (fair market value on breach date) = (actual loss).
However, in this particular case,$135,000 (contract price) - $90,000 (bank's sale) = $45,000 (actual loss)
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