## Facts

- Texpar Energy, Inc. (buyer) contracted on May 29, 1992 to buy 15,000 tons of asphalt from Murphy Oil USA, Inc. (seller) at an average of $53 per ton.
- The same day, Texpar contracted to resell the same quantity to Starry Construction Company at an average of $56 per ton, projecting a $45,000 profit if both contracts were performed.
- Asphalt prices were volatile; evidence showed prices ranging roughly from $40 to $100 per ton in early 1992.
- Texpar took delivery of 690 tons under the Murphy contract.
- On June 5, 1992, when the market price was found to be about $80 per ton, Murphy stopped deliveries and repudiated, stating its sales manager lacked authority to make the contract.
- Starry demanded performance; Starry and Murphy later negotiated directly and agreed to a new price of $68.50 per ton.
- Texpar agreed to reimburse Starry for the increase above the resale price and related incidental items, paying about $191,000.
- Texpar sued Murphy for buyer’s damages measured by the market–contract differential as of June 5, 1992, rather than limiting recovery to the $45,000 expected profit and the $191,000 paid to Starry.
- A jury found damages of $386,370 for the 14,310 undelivered tons, calculated as (market price $80 − contract price $53) × 14,310.

## Issues

1. Whether Wisconsin U.C.C. § 2-713 required buyer’s damages to be the market–contract differential at the time the buyer learned of the breach, even if that amount exceeded the buyer’s claimed “actual” loss.
2. Whether the district court’s jury instructions on the § 2-713 damages measure and related concepts were erroneous and required a new trial or different damages measure.

## Decision

- The Seventh Circuit affirmed the judgment for Texpar.
- The court held that Wisconsin’s enactment of U.C.C. § 2-713 entitled Texpar to the difference between the market price when it learned of the repudiation (June 5) and the contract price, plus allowable incidental and consequential damages, less expenses saved.
- The court rejected Murphy’s argument that damages should be capped at Texpar’s expected profit plus the amount Texpar paid Starry.
- The court found no reversible error in the jury instructions; the charge adequately stated the controlling law and allowed the jury to determine the market price and compute damages under § 2-713.

## Legal Principles

- Under U.C.C. § 2-713 (as enacted in Wisconsin), a buyer’s damages for non-delivery or repudiation are generally measured by the market–contract differential at the time the buyer learned of the breach, plus incidental and consequential damages, less expenses saved.
- A buyer need not prove it actually purchased replacement goods at the market price to recover § 2-713 market damages.
- Downstream arrangements or settlements with the buyer’s customer do not displace or cap the buyer’s statutory remedy against the breaching seller under § 2-713.
- A damages award is not improper merely because the § 2-713 formula yields an amount exceeding the buyer’s net profit on a related resale transaction, particularly in a volatile market.
- Jury instructions applying the correct statutory measure of damages are upheld absent a showing that the charge misstated the law or misled the jury in a way affecting the verdict.

## Conclusion

The court upheld a buyer’s recovery of market damages under Wisconsin U.C.C. § 2-713 based on the market price at repudiation, rejecting a limitation to the buyer’s asserted out-of-pocket loss and affirming the jury instructions that implemented the statutory damages formula.


Texpar Energy, Inc. v. Murphy Oil USA, Inc., 45 F.3d 1111 (7th Cir. 1995)