Protecting Yourself: Exercising the Buyer's Right to Cover Under NY UCC
When a seller fails to deliver goods as promised, buyers have the option to "cover" by purchasing substitute goods. The New York UCC outlines this remedy to help buyers mitigate losses.
Understanding UCC §2-712: Buyer's Procurement of Substitute Goods
Right to Cover:
The buyer may purchase or contract to purchase goods in substitution for those due from the seller.
Conditions:
Cover must be made in good faith and without unreasonable delay.
Recovery of Damages:
The buyer can recover the difference between the cost of cover and the original contract price, plus any incidental or consequential damages, minus expenses saved.
Benefits for Buyers:
Mitigation of Losses:
Allows continuation of operations without significant disruption.
Legal Recourse:
Provides a clear method for calculating damages.
Best Practices:
Act Promptly:
Seek substitute goods as soon as possible to prevent further losses.
Document Transactions:
Keep detailed records of all cover purchases and related expenses.
Ensure Good Faith:
Make reasonable efforts to obtain a fair price for substitute goods.
Implications for Sellers:
Potential Liability:
May be responsible for the buyer's additional costs due to breach.
Importance of Fulfillment:
Highlights the necessity of meeting contractual obligations to avoid damages.
Key Takeaways:
Buyers have the right to cover when sellers breach contracts.
Acting in good faith and documenting the process is essential.
Understanding this remedy helps buyers protect their interests effectively.
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