## Facts

- Joe McMillan contracted to buy a used bulldozer from Meuser Material and Equipment Company for $9,825, f.o.b. Springdale, Arkansas.
- The parties misunderstood the delivery date: McMillan believed delivery was due December 21, 1973; Meuser believed January 1, 1974.
- When the bulldozer had not been delivered by December 24, 1973, McMillan stopped payment on his check and treated the deal as off.
- Meuser treated the stop-payment as a breach and sued McMillan for breach of contract.
- After the dispute arose, the bulldozer remained in Arkansas for roughly fourteen months; it was kept outdoors but serviced.
- During that period, the construction equipment market declined, and Meuser knew the market was dropping.
- Meuser did not attempt to resell the bulldozer until about a year after the breach and ultimately resold it in a private sale on March 5, 1975, for $7,230.
- The trial court (sitting as the factfinder) found McMillan liable and awarded Meuser $2,595 in actual damages (contract price minus resale price) plus $105 in incidental damages for servicing, for a total of $2,700.
- McMillan appealed, challenging the seller’s use of the UCC resale measure and the damages award.

## Issues

1. Was Meuser’s resale “made in good faith and in a commercially reasonable manner” under UCC § 2-706 when Meuser waited roughly fourteen months to resell in a declining market and made no serious effort to sell during much of that time?
2. If the resale did not satisfy UCC § 2-706, could Meuser still recover damages under UCC § 2-708(1), and what proof was required to support that measure?
3. Was McMillan justified in canceling the contract and stopping payment based on the delivery-date dispute?

## Decision

- The Arkansas Supreme Court agreed that McMillan breached the contract by stopping payment and attempting to cancel; the evidence supported the trial court’s finding that McMillan’s cancellation was not justified by the delivery-date misunderstanding.
- The court held that Meuser’s resale did not meet UCC § 2-706 because the fourteen-month delay—combined with Meuser’s awareness of a falling market and the lack of timely resale efforts—was not commercially reasonable.
- Because § 2-706 did not apply, Meuser could not recover the contract-minus-resale differential as “resale damages.”
- The court explained that a failed § 2-706 resale does not eliminate the seller’s remedies; the seller may seek damages under § 2-708(1) based on the difference between the contract price and the market price at the time and place for tender.
- On this record, however, the actual-damages award based on the resale differential could not stand, and the court required a remittitur of the $2,595 actual-damages component; the $105 incidental-damages award was allowed.
- The judgment was affirmed only on condition that Meuser remit the unsupported actual damages; otherwise, the case would not stand as entered.

## Legal Principles

- UCC § 2-706 permits a seller to recover contract price minus resale price (plus incidental damages, minus expenses saved) only if the resale is made in good faith and in a commercially reasonable manner, including as to the time of resale.
- A lengthy, largely unexplained delay in resale—especially when the seller knows the market is declining—can make the resale commercially unreasonable and bar use of § 2-706’s resale-price formula.
- If a resale does not satisfy § 2-706, the seller is not left without a remedy; the seller may recover under UCC § 2-708(1) using the contract-price-minus-market-price measure at the time and place for tender, but the seller must present evidence of the relevant market price.
- Incidental damages under UCC § 2-710 may be recovered for commercially reasonable expenses incurred because of the buyer’s breach (such as reasonable costs to maintain or care for the goods).

## Conclusion

McMillan’s stop-payment was an unjustified breach, but Meuser could not use UCC § 2-706 resale damages because waiting about fourteen months to resell in a known declining market was not commercially reasonable; without proof of market-price damages under § 2-708(1), the court required removal of the $2,595 actual-damages award while allowing the $105 incidental damages.


McMillan v. Meuser Material and Equipment Co., 541 S.W.2d 911 (1976)