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"The lost volume seller, UK" [2019] ELECD 2882; in Goldberg, P. Victor (ed), "Rethinking the Law of Contract Damages" (Edward Elgar Publishing, 2019) 69

Book Title: Rethinking the Law of Contract Damages

Editor(s): Goldberg, P. Victor

Publisher: Edward Elgar Publishing

Section: Chapter 4

Section Title: The lost volume seller, UK

Number of pages: 19

Abstract/Description:

If a buyer breaches a contract but the market price has remained unchanged, English courts and the treatises have treated the seller as a “lost volume seller.” The seller, it is argued, could have had two sales, not one, so it lost the profit on the second sale. This chapter recognizes that the buyer has an option to terminate and that the contract prices that option. The implicit option price of the lost volume remedy results in an absurd contract, setting the option price high when it should be low and vice versa. The default rule ought to be the contract-market differential (zero in these cases) with the parties determining the appropriate option price with a nonrefundable deposit or liquidated damages.