## Facts

- Norton & Bush contracted in writing with Judson Canfield for delivery at New Orleans of 2,000 barrels of superfine wheat flour by May 1, 1812, at $7 per barrel (with an option for up to 1,000 barrels as “fine” at $0.50 less).
- The buyers agreed to pay $5,000 in advance, with additional payments scheduled later and the remaining balance due six months after delivery.
- The buyers paid the $5,000 advance on March 12, 1812.
- The buyers alleged they were ready at New Orleans on May 1, 1812, and had performed their obligations.
- Canfield failed entirely to deliver any flour.
- At the delivery date and place, the market price of superfine flour was about $5.30–$5.50 per barrel, below the contract price.

## Issues

1. What is the proper measure of damages when a buyer prepays under a goods-delivery contract and the seller wholly fails to deliver, but the market price at the delivery date is lower than the contract price?
2. May the buyer recover the prepaid advance (with interest) rather than being limited to expectation damages measured by the contract/market differential?

## Decision

- The court denied the seller’s petition for a new trial and upheld the trial court’s damages instruction.
- The court approved an award equal to the $5,000 advance plus interest, rather than limiting damages to the contract-price/market-price differential.
- The court reasoned that applying the market-difference measure in these circumstances would allow the breaching seller to retain the advance and benefit from nonperformance after a price decline.
- Dissents would have applied the conventional expectation measure tied to the value at the delivery date and criticized awarding a return of the advance in an action framed as breach-of-contract damages; one dissent also faulted the buyers for not purchasing substitute goods.

## Legal Principles

- When a seller wholly fails to deliver goods after receiving a substantial advance, the buyer may recover the advance payment with interest as damages.
- The contract/market differential is not an exclusive measure of damages where its application would permit the breaching seller to profit by retaining the buyer’s advance despite total nonperformance.
- Contract damages may be assessed to prevent unjust retention of a prepayment when the buyer received none of the promised performance.

## Conclusion

The court held that, where a seller takes a substantial advance and then fails entirely to deliver, the buyer may recover the advance plus interest even if market prices fell below the contract price, because limiting damages to the market differential would allow the seller to benefit from the breach.


Bush v. Canfield, 2 Conn. 485 (Conn. Sup. Ct. Err. 1818)