The Middleman's Damages Revisited

23 Pages Posted: 4 Dec 2018

Date Written: November 26, 2018

Abstract

If A promises to sell to B who, in turn, promises to sell to C and either A or C breaches should B receive the gain it expected had both transactions occurred (lost profits) or the larger market/contract differential? Recent case law and commentary argues for the lost profit remedy. The argument is that there is a conflict between awarding market damages and making the nonbreacher whole. This paper argues that there is no conflict. If B were a broker, and C breached, then A would have an action against C for market damages. If B were party to the two related contracts A should also be liable for market damages. By being a party to the two contracts, B has taken on counterparty risk. This paper criticizes a recent paper by Roy Anderson and provides a detailed critique of the case law.

Suggested Citation

Goldberg, Victor Paul, The Middleman's Damages Revisited (November 26, 2018). Columbia Law and Economics Working Paper No. 595. Available at SSRN: https://ssrn.com/abstract=3290967 or http://dx.doi.org/10.2139/ssrn.3290967

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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