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R.E. Davis Chemical Corp. v. Diasonics Inc.

United States Court of Appeals for the Seventh Circuit
826 F.2d 678 (1987)


Facts

R.E. Davis Chemical Corp. (Davis) (plaintiff) contracted with Diasonics, Inc. (Diasonics) (defendant) to purchase medical equipment for a new facility that Davis had contracted with two physicians to establish. When the physicians breached their contract with Davis, Davis breached its contract with Diasonics and refused to accept delivery of the medical equipment. Diasonics sold the contract equipment to another purchaser for the same amount as the contract price. Davis then sued Diasonics to recover its $300,000 down payment, less $500 as provided by the Uniform Commercial Code (UCC). Diasonics agreed that Davis was entitled to return of its down payment under the UCC, but asserted that it was entitled to a setoff for any damages Diasonics incurred as result of Davis’ breach and claimed that it was entitled to damages for lost profit. The trial court found that Diasonics’ damages were limited to the difference between the contract price and the resale price, as available under Section 2-706 of the UCC, and denied damages under 2-708(2), which permits recovery of lost profit. Diasonics appealed.

Rule of Law

Issue

Holding and Reasoning (Cudahy, J.)

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