1. Explain what happened mathematically with the damages.

2. Why is reselling above the contract price not a sufficient remedy?

James Bowen and Richard Cagle (appellants), doing business as B & C Shavings (B & C) agreed in 2009 to sell Kendall Gardner a shavings mill to produce wood shavings for poultry processors. They agreed that B & C would build an eight-foot shaving mill for Gardner. On July 13, 2009, B & C faxed an invoice to Gardner reflecting a purchase price of $86,200, a thirty percent down payment of $25,860, and a “balance due before shipment” of $60,340. Gardner sent a payment of $25,920, which included the bank’s fees, via wire transfer to B & C on July 14, 2009.

In August 2009, Gardner discovered that the poultry plants with whom he had planned on doing business were no longer interested in purchasing wood shavings. Gardner called Cagle to inform him of the situation and to see if B & C could stop production of the machine.

On September 10, 2009, B & C wrote a letter to Gardner informing him that the shaving machine had been finished and that the balance of $60,340 was due. The letter further stated that Gardner had “ten days from this date ... to pay the balance due or you will lose the down payment that you paid.” Gardner spoke with Cagle several times on the phone that weekend and eventually responded with a letter dated September 14, 2009, in which he explained his financial circumstances and asked B & C to help him recover part of his down payment. B & C eventually sold the machine to another company for $86,500 in November 2009. B & C never returned any of Gardner’s down payment to him.

The eight-foot machine ordered by Gardner was unusual in the industry and was a special order. B & C was able to sell the machine after providing additional work to meet the new purchaser’s specifications. B & C spent $10,406.67 in order to be able to sell the machine to another company.

Gardner filed a complaint seeking recovery of the down payment.

The trial court concluded that “the equitable thing here” would be for B & C to return Gardner’s down payment to him, less the money that B & C spent making modifications to the machine so that it could be sold. The court therefore subtracted the $10,406 in modifications from the $25,860 down payment and concluded that Gardner was entitled to be awarded $15,454, plus postjudgment interest. B & C appealed.

JUDICIAL OPINION

WHITEAKER, Judge … [Gardiner] promised to purchase the shaving machine, and he did not do so. In the event of a breach of contract by the buyer, the Uniform Commercial Code sets out the available remedies for the seller: Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (§ 4-2-612), then also with respect to the whole undelivered balance, the aggrieved seller may: (d) resell and recover damages as hereafter provided (§ 4-2-706)[.]

By selling the shaving machine to another buyer, B & C elected the remedy of resale pursuant to Arkansas Code Annotated section 4-2-706. That section sets out the means by which to calculate the seller’s damages in the event of the buyer’s breach:……………….