## Facts

- Allied Canners & Packers, Inc. contracted to buy ten containers of Natural Thompson Seedless raisins from Victor Packing Company, FOB Port of Oakland, for October 1976 shipment.
- Allied had preexisting resale contracts with Japanese customers and expected about a 4% profit (about $4,462.50).
- After contracting, unseasonable rains damaged the raisin crop, and market prices rose sharply.
- Victor could not obtain sufficient “free” or reserve raisins under the federal marketing order administered by the Raisin Administrative Committee and did not deliver the raisins.
- Allied did not purchase substitute raisins because the higher market price would have made the resales unprofitable.
- One Japanese customer cancelled and the other did not assert a claim; Allied incurred no liability to its customers but lost its expected resale profit.
- Allied sued for breach, seeking damages based on the market price minus contract price measure under California Commercial Code section 2-713 (about $150,000).
- After a bench trial, the court found breach, treated Allied as a broker, and awarded only $4,462.50 in damages; Allied appealed.

## Issues

1. Whether Allied was a “buyer” under the California Commercial Code or merely a broker with limited remedies.
2. If Allied was a buyer and did not cover, whether damages must be measured by the section 2-713 market-minus-contract formula or may be limited to Allied’s actual economic loss to avoid overcompensation.

## Decision

- The court held Allied was a buyer because it contracted to buy goods from Victor for resale.
- The court affirmed the judgment awarding $4,462.50, limiting damages to Allied’s lost resale profit rather than the larger section 2-713 market differential.
- The court reasoned that a mechanical application of section 2-713 would put Allied in a better position than performance, given Allied’s lack of downstream liability and its decision not to cover.

## Legal Principles

- A party that contracts to buy goods is a “buyer” under the Commercial Code even if it intends immediate resale.
- Commercial Code remedies aim to place the aggrieved party in as good a position as performance would have, not to award a recovery disconnected from actual loss.
- Although section 2-713 provides a market-minus-contract measure when a buyer does not cover, a court may limit recovery to actual economic loss where applying section 2-713 would overcompensate the buyer.
- Lost profit may be the appropriate measure when the buyer’s only proven loss from nondelivery is the profit expected on resale and no consequential loss is shown.

## Conclusion

The court recognized Allied as a buyer under the Commercial Code but affirmed a damages award limited to Allied’s actual lost profit, holding that section 2-713 need not be applied to produce a market-based recovery that would overcompensate the buyer on the facts presented.


Allied Canners & Packers, Inc. v. Victor Packing Co., 162 Cal. App. 3d 905 (Cal. Ct. App. 1984)