The Lost Volume Seller in English Law

34 Pages Posted: 12 Nov 2018

Date Written: November 6, 2018

Abstract

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 paper 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.

Suggested Citation

Goldberg, Victor Paul, The Lost Volume Seller in English Law (November 6, 2018). Columbia Law and Economics Working Paper No. 594. Available at SSRN: https://ssrn.com/abstract=3279823 or http://dx.doi.org/10.2139/ssrn.3279823

Victor Paul Goldberg (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-8380 (Phone)
212-854-0221 (Fax)

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