## Facts

- An exporter agreed to sell 35,000 metric tons of phosphate fertilizer to an international commodities trader, C.&F. Antwerp, with split shipment dates in November 1978.
- The buyer was required to open a confirmed irrevocable letter of credit for the seller’s benefit by a specified deadline; bank communications and confirmation occurred in early November 1978.
- The seller failed to ship the first installment on time, and the buyer asserted time-sensitive downstream commitments.
- To meet its downstream commitment, the buyer obtained substitute goods at a higher price (cover).
- After late deliveries, the buyer resold some of the fertilizer at a profit and also realized increased revenue from a renegotiated downstream sale.
- The buyer sued for breach of contract and sought consequential damages, including cover-related losses.
- A jury found for the buyer and awarded substantial damages; the seller appealed, challenging liability and the damages calculation.

## Issues

1. Whether the evidence supported the jury’s finding that the seller breached the sales contract by failing to ship within the contemplated time.
2. Whether the buyer’s damages had to be reduced by offsetting profits the buyer earned through transactions undertaken in response to the breach (including renegotiated resale terms and profitable resale of late-delivered goods).

## Decision

- The appellate court left the liability determination undisturbed, accepting the jury’s finding of breach based on untimely shipment.
- The court reduced the buyer’s net recovery, holding that profits the buyer earned in connection with its post-breach transactions were benefits causally linked to the breach.
- The court treated those profits as credits against the buyer’s claimed losses, limiting recovery to the buyer’s net loss after accounting for gains realized through mitigation-related dealings.

## Legal Principles

- Contract damages are compensatory and aim to place the nonbreaching party in the position it would have occupied absent breach, measured as net loss rather than gross loss.
- When a nonbreaching party takes reasonable steps to mitigate, any net economic benefit produced by those steps may be treated as a credit against damages to avoid overcompensation.
- Under a broad causation approach, gains that would not have been realized but for the breach can be characterized as benefits arising from the breach and deducted from the damages award.
- In a sale of goods dispute, cover and consequential damages may be available, but the recovery may be adjusted to reflect breach-related benefits to prevent a windfall.

## Conclusion

The court affirmed the finding that the seller breached by failing to make timely shipment, but it substantially reduced the buyer’s damages by offsetting profits from mitigation-related transactions, reasoning that such gains were breach-caused benefits that must be credited to arrive at the buyer’s net compensable loss.


Fertico Belgium, S.A. v. Phosphate Chems. Exp. Ass’n, Inc., 100 A.D.2d 165 (N.Y. App. Div. 1st Dep’t 1984)