## Facts

- Technical Textile Co. agreed in a written contract to manufacture and sell 20,000 pounds of yarn to Jagger Bros., Inc. at $2.15 per pound.
- Technical manufactured and delivered 3,723 pounds, which Jagger accepted and paid for.
- Jagger repudiated the contract by letter dated August 12, 1960, refusing any future deliveries.
- The remaining 16,277 pounds were never manufactured.
- Technical offered evidence that the market price on August 12, 1960 was $1.90 per pound.
- No evidence was introduced regarding Technical’s cost to manufacture the remaining yarn.
- The trial court (bench trial) awarded $4,069.25, calculated as (contract price − market price) × undelivered quantity: ($2.15 − $1.90) × 16,277.

## Issues

1. When a buyer repudiates a contract for goods to be manufactured, does UCC § 2-708(1) permit damages measured by the contract–market differential without proof of manufacturing cost, or must the seller prove manufacturing cost (effectively limiting recovery to provable lost profit)?
2. Did the seller sufficiently prove the relevant market price at the time and place for tender as required for UCC § 2-708(1) and the proof provisions of UCC § 2-723?

## Decision

- The Superior Court of Pennsylvania affirmed the judgment for the seller.
- The court held that UCC § 2-708(1) supplies the measure of damages for buyer repudiation even where the goods were to be manufactured and were not completed.
- The seller was not required to prove cost of manufacture to recover more than nominal damages under § 2-708(1).
- The court held the seller’s evidence adequately established market price under UCC § 2-723.
- The damages award of $4,069.25 was upheld.

## Legal Principles

- Under UCC § 2-708(1), the usual measure of seller’s damages for buyer nonacceptance or repudiation is the difference between the market price at the time and place for tender and the unpaid contract price, plus incidental damages, less expenses saved.
- UCC § 2-708(1) applies to contracts for goods to be manufactured; the seller’s recovery is not conditioned on proving manufacturing cost.
- UCC § 2-708(2) operates as a secondary measure only when § 2-708(1) is inadequate to put the seller in the position performance would have produced.
- Market-price-based damages under § 2-708(1) must be supported by competent proof of market price consistent with UCC § 2-723.

## Conclusion

The court held that, for buyer repudiation of a contract for goods to be manufactured, the seller may recover the contract–market differential under UCC § 2-708(1) upon adequate proof of market price, without separately proving manufacturing cost, and affirmed the market-differential damages award.


Jagger Bros., Inc. v. Technical Textile Co., 198 A.2d 888 (Pa. Super. Ct. 1964)