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Question: Donna and Alan Smith wanted to raise


Donna and Alan Smith wanted to raise emus, which are flightless Australian birds that look like ostriches. The creatures reproduce rapidly in almost any terrain and are sold for their meat, which is high in protein and low in fat, and for their oil, leather, and feathers. The Smiths paid Tomie Clark, the manager of Penbridge Farms, $4,000 as a down payment for a “proven breeder pair.” Since it is impossible to discern an emu’s gender by looking, the Smiths asked Clark several times if the two birds were male and female, and he assured them that the pair had successfully produced chicks the previous breeding season.
The Smiths placed the prospective lovebirds in the same pen, but the breeding season passed without a hint of romance. Donna Smith phoned Penbridge Farms, which advised her on a procedure used to determine gender. Donna performed this task and learned that the emus were both gentlemen. The would-be breeders asked for their money back but Penbridge refused, so the Smiths flew into court. The trial judge awarded the couple $105,215, representing lost profits from their anticipated chicks. Penbridge appealed, arguing that a buyer cannot count her chicks before they have hatched.
Issue: Did the trial court err by awarding lost profits?
Excerpts from Judge Popovich’s Decision: [Penbridge claimed that the] evidence was speculative and insufficient to support an award of consequential damages, including damages for lost profits. [Penbridge argued that, since] the breeding of emus is a relatively new business, and there is no reliable data to project the ultimate success in breeding emus, the [Smiths’] claims for loss of chick production are entirely speculative and do not meet the “reasonable certainty” requirement of the law of damages.
The Uniform Commercial Code provides the following circumstances for the recovery of consequential damages resulting from the breach of the seller: any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by “cover” or otherwise. [UCC §2-715(2).]
The determination of damages lies with the fact finder, who weighs the evidence and assesses the credibility of the witnesses. Although the court recognized that emu breeding was a relatively new commercial business, it determined that the award of consequential damages could be calculated with a reasonable degree of certainty from the evidence adduced at trial. The court below initially found that the value of a three-month old chick produced from the [previous] season was $5,000. The lower court then concluded that [the Smiths] suffered incidental and consequential damages in the amount of $90,000.00. From our thorough evaluation of the record, we conclude that the evidence was sufficient for the lower court to measure lost profits with a reasonable degree of certainty. The basis for this rule is that the breaching party should not be allowed to shift the loss to the injured party when damages, even if uncertain in amount, were certainly the responsibility of the party in breach.
Order affirmed.

Required:
a. What are incidental damages?
b. What are consequential damages?


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2.99

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