the buyer has been in default in the payment of the price an unreasonable time. The seller shall not thereafter be liable to the buyer upon the contract to sell or the sale, but may recover from the buyer damages for any loss occasioned by the breach of the contract or the sale. (2) The transfer of title shall not be held to have been rescinded by an unpaid seller until he has manifested by notice to the buyer or by some overt act an intention to rescind. It is not necessary that such overt act should be communicated to the buyer, but the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue involving the question whether the buyer has been in default an unreasonable time before the right of rescission was asserted. The important point to notice in the first instance is, that this section authorizes an unpaid seller, upon the buyer's default, to rescind the transfer of title; that is, the buyer's failure to pay gives to the seller the legal power to treat the title as never having passed to the buyer. The seller may exercise this right only in the manner prescribed in the act; i. e., by manifesting by notice to the buyer or by some overt act an intention to rescind. While the next sentence provides that, this notice need not be communicated to the buyer, it is always wiser to do so. After the seller manifests his intention to rescind, what are the legal relations between buyer and seller? Simply this: There is still a contract between buyer and seller, but the title to the goods has now returned to the seller. The situation is the same as would exist in any contract to sell goods, title not having passed to the buyer, which contract had been broken by the buyer. Consequently the seller may sue the buyer after rescission upon the contract for damages to recover for the breach. Since title is now back in the seller, the provisions of section 64 are applicable to all actions brought by the seller against the buyer for the latter's breach of an executory contract to sell. Here we find that the rule of damages is: "Where there is an available market for the goods in question, the measure of damages is, in the absence of special circumstances showing proximate damage of a greater amount, the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted." It is to be noticed that, if the seller, after rescission of the transfer of title, sells the goods, he does so as any owner of goods may do, and his right is in no sense based upon the section heretofore discussed, giving an unpaid seller the right of resale. As noted above, the law gives the unpaid seller the power, not only to rescind the transfer of title, but also to rescind the whole. contract. Section 65. Where the goods have not been delivered to the buyer, and the buyer has repudiated the contract to sell or sale, or has manifested his inability to perform his obligations thereunder or has committed a material breach thereof, the seller may totally rescind the contract or the sale by giving notice of his election so to do to the buyer. Very seldom will it be to the advantage of the seller totally to rescind the contract, because, if he does so, he will have no right of action on the contract against the buyer for the breach. The unpaid seller may sue the buyer, not on the contract, but upon an implied or quasi contract to recover the reasonable value, not the contract price, of what he parted with. The plaintiff in such a case is seeking restitution. He is not suing for damages to compensate him for the loss of the contract. It would seem that an actual notice must needs be given to the buyer in this case, whereas, in rescinding the transfer of title, he need but manifest his intentions to rescind by some overt act. The remedy of rescission was taken up in Chapter X of Contracts, so that it is not necessary to go further into this matter here. SECTION 7.-RIGHT TO DAMAGES FOR BREACH OF CONTRACT TO SELL Where title has not passed to the buyer, and the buyer has broken his contract, it is perfectly obvious that the seller may sue the buyer on the contract and recover damages for the breach. Assuming that the seller was not in default, and that the buyer had materially broken his contract, the only remaining question concerns the measure of damages. Sales Act, Section 64. (1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance. (2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract. (3) Where there is an available market for the goods in question, the measure of damages, is in the absence of special circumstances, showing proximate damages of a greater amount, the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to accept. (4) If, while labor or expense of material amount are necessary on the part of the seller to enable him to fulfill his obligations under the contract to sell or the sale, the buyer repudiates the contract or the sale, or notifies the seller to proceed no further therewith, the buyer shall be liable to the seller for no greater damages than the seller would have suffered if he did nothing toward carrying out the contract or the sale after receiving notice of the buyer's repudiation or countermand. The profit the seller would have made if the contract or the sale had been fully performed shall be considered in estimating such damages. Sales Act, Section 51. When the seller is ready and willing to deliver the goods, and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods. If the neglect or refusal of the buyer to take delivery amounts to a repudiation or breach of the entire contract, the seller shall have the rights against the goods and on the contract hereinafter provided in favor of the seller when the buyer is in default. TORKOMIAN v. RUSSELL et al. (Supreme Court of Errors of Connecticut, 1916. 90 Conn. 481, 97 Atl. 760.) Action by Baron J. Torkomian against William E. Russell and another. From a judgment for plaintiff, defendants appeal. WHEELER, J. The finding recites that: On November 1, 1913, the defendants were dealers in automobiles in Waterbury and agents for the sale of the Lozier make of automobile. On said day the plaintiff and the defendants entered into a written contract by the terms of which the defendants agreed to sell the plaintiff a Lozier Six automobile, to deliver the same between April 15 and May 1, 1914, and to accept in part payment a used Studebaker car at the agreed price of $700, and to give the plaintiff their note for $700 payable to plaintiff or order on demand in consideration of the Studebaker car. The plaintiff in consideration of the promises of the defendants agreed to pay $3,250 for the Lozier car and not to demand payment of the $700 note unless the defendants failed to deliver the Lozier car. From about the beginning of 1914, down to the delivery period, the plaintiff repeatedly expressed his unwillingness to take the Lozier Six, and desired defendants to substitute another car, which they refused to do. The defendants were ready and willing to deliver the Lozier Six at the delivery period; but, by reason of plaintiff's expressed unwillingness to accept a car if delivered, the defendants did not make actual physical delivery. The agreement expressly provides that the note is not to be demanded unless the defendants failed to deliver the car at the period named. The defendants pleaded, and it is found, that the plaintiff had notified the defendants for upwards of five months and down to the period of delivery named that he would not accept the Lozier Six. The defendants were entitled to act upon the assumption that the plaintiff meant what he said, and they were not required to go through the idle ceremony of making a physical tender. They did all that they were obliged to do when, having the means of getting the car, they "were ready and willing to deliver the Lozier Six automobile at the time specified for delivery in said contract." There has been no failure on the part of the defendants to deliver this car, and the judgment, so far as the action upon the note was concerned, should have been for the .defendants. * * * The remaining reasons of appeal that require consideration are based upon the measure of damages for the defendants adopted by the trial court. In count 1 of the complaint the plaintiff seeks to recover for the defendants' breach of their contract, and in count 2 upon the $700 The defendants alleged under their special defense to both counts and as a basis of recovery on their counterclaim, that the plaintiff had notified them that he would not accept the car contracted for, if tendered, and, further, that they had lost in consequence of this breach of contract by the plaintiff seven hundred dollars. The defendants, if entitled to recover under their counterclaim, were entitled to recover under our common law such sum as would put them, so far as it can be done by money, in the same position they would have been in if the contract had been performed. * * In the absence of special circumstances requiring a different rule, the damages recoverable by a vendor for refusal to take goods contracted for is the difference at the time and place of delivery, between the contract price and the market price. * But we recognize that this rule is not an unbending one, that the circumstances may require its modification in order to effectuate the cardinal purpose, “just compensation for the loss incurred." And the loss must be such as "may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract." Section 64 of the Sales Act reaffirms our rule for measuring damages in case of breach of a contract of sale by the contractee or vendee. * * * The market price to these defendants of a Lozier Six was undoubtedly less than its selling price, since they were selling agents who purchased and took title to the cars they disposed of. Section 64 provides as a measure of damages the difference between the contract price and the market price "in the absence of special circumstances showing proximate damage of a greater amount." The circumstance that these defendants were selling agents and purchased cars at a rate lower than the market price of the cars to the public made the ordinary measure of damages inadequate. The defendants lost by the plaintiff's breach the difference between the contract price and what the car ready for physical delivery to the plaintiff would have cost them, which would have been the purchase price of the car plus the expense, if any, of delivery and of making it ready for delivery. This is the application to the facts of this case of section 64. It requires the person who has failed to keep his contract of sale to pay the loss caused to the contractor who has kept his contract. The defendants, as vendors or contractors, were entitled to show what a Lozier Six car would have cost them in the same way a manufacturer might show the cost of an article manufactured by him. The defendants would thus recover the profits they would have made had the plaintiff carried out his contract. In such a case profits are not speculative, but certain and ascertainable, and the legitimate fruits of the contract. *The profit of the defendants might also have been ascertained by finding the commission made by them in the sale less the expenses incurred by them. * * * * * * * * Since the defendants retained the Studebaker car and the agreed price of this car was $700, the plaintiff should be allowed this sum, and the defendants should be allowed their profit had the plaintiff fulfilled his contract. The judgment should have been for the difference between these sums and for the plaintiff if the $700 exceeded the profit, and for the defendants if the profit exceeded the $700. There is error, the judgment is reversed, and a new trial ordered. * * * 5. Implied Warranty That the Goods Shall Correspond to the Description. 6. Implied Warranty That the Goods Shall Correspond to the Sample. 7. Implied Warranty of Merchantability. S. Implied Warranty of Fitness for a Particular Purpose. 9. Implied Warranties May Arise from the Usage of Trade. 10. Implied Warranties May be Negatived by Agreement. 11. Rights of Sub-Vendees Against Former Warrantors. SECTION 1.-INTRODUCTION From the business standpoint, the subject of warranties in sales and contracts to sell is of great importance. The legal problem in outline is simply this: To ascertain the circumstances under which the law regards a seller as having broken his promise as to the kind or quality of goods sold. We are already aware of the fact that the law recognizes express promises and implied promises. Similarly we find two classes of warranties: Express warranties and implied warranties. The representation or promise which is called a warranty is often called a guaranty. It is sometimes said that a seller guarantees his product. In the law the word “guaranty" is not used in this sense. In the law the word "guaranty" is used to describe a contract in which one person promises to be responsible for the performance of another person's obligation. Controversy and litigation between buyer and seller over warranties is sometimes unnecessary. A grocer, who sells his customer a can of beef, which gives his customer ptomaine poisoning, could not very easily have avoided the liability; but the seller of a machine, who makes extravagant statements of fact concerning the article, might have avoided the liability. Let us look for a moment at the subject of express warranties through the eyes of the seller, who, although anxious to make a sale, does not intend to make untrue statements about his goods. What matters of legal policy should he be aware of as he enters the negotiations leading up to the sale? Why does one make untrue statements about the goods which he sells? Now and then, of course, we find one who will deliberately and intentionally misrepresent his goods. This is fraud, because there is a guilty mind accompanying the act. In such a case, wholly outside the law of contracts, the law of torts gives to the defrauded buyer a right to sue the fraudulent seller in an action of deceit. We may eliminate that kind of a case from our discussion, for we are here concerned |