## Facts

- Cosden Oil & Chemical Company, a Texas petrochemical producer, agreed to sell Helm, a Hamburg-based trading company acting through Helm Houston, large quantities of polystyrene for January–February 1979 delivery.
- Negotiations occurred by telephone and telex; Helm’s Houston general manager and Cosden’s national sales coordinator agreed on price, quantities, and delivery “to be called for” by Helm.
- Helm Houston provided written purchase confirmations reflecting the agreed terms.
- Cosden suffered production disruptions: a frozen river blocked styrene monomer shipments to one plant, and a defective reactor shut down production at another plant.
- Cosden delivered some product but warned of delays and then canceled the remaining undelivered quantities, refusing to complete a final delivery under one order.
- Helm withheld payment for some delivered product and sought damages for Cosden’s cancellation as polystyrene prices rose.

## Issues

1. Under UCC § 2-713, when a seller anticipatorily repudiates and the buyer does not cover, what is the proper time for measuring market-price damages: at notice of repudiation, after a commercially reasonable time, or at the contract delivery date?
2. How should UCC § 2-713 (“when the buyer learned of the breach”) be read in light of UCC § 2-610 (right to await performance for a commercially reasonable time)?

## Decision

- The Fifth Circuit held that, for anticipatory repudiation with no cover, the UCC § 2-713 market-price measure is taken at the time the buyer learns of the repudiation plus a commercially reasonable period.
- The court affirmed the district court’s use of a “commercially reasonable time after repudiation” as the valuation point for market damages under Texas UCC Article 2.
- The court rejected measuring damages either immediately upon notice of repudiation (as potentially undercompensating the buyer in a rising market) or at the contract delivery date (as permitting excessive speculation).
- The court remanded for modification of damages on a separate, limited issue involving certain unallocated product during shortage conditions.

## Legal Principles

- When a seller anticipatorily repudiates and the buyer does not cover, UCC § 2-713’s phrase “time when the buyer learned of the breach” is construed to include the commercially reasonable time permitted by UCC § 2-610 to await performance.
- In this setting, the buyer’s market damages are the difference between contract price and market price at a commercially reasonable time after the buyer learns of repudiation, plus any recoverable incidental and consequential damages.
- The commercially reasonable-time approach aligns Article 2 remedies with the goal of placing the aggrieved party in as good a position as if performance had occurred, without granting an overrecovery tied to later delivery-date pricing.

## Conclusion

The court interpreted Texas UCC § 2-713 for anticipatory repudiation cases to measure market damages at a commercially reasonable time after the buyer receives notice of repudiation, harmonizing the market-damages remedy with the buyer’s statutory option to await performance for a reasonable period under UCC § 2-610.


Cosden Oil & Chem. Co. v. Karl O. Helm Aktiengesellschaft, 736 F.2d 1064 (5th Cir. 1984)