The purpose of damages is to compensate for economic loss due to a breach of contract. But the remedies available to buyers and sellers differ. In this activity, we look at a fictional scenario involving a dentist office's dispute with a medical device equipment manufacturer.

CONCEPT REVIEW:

When one of the parties to a contract fails to perform its obligations, under the UCC the injured party has a variety of remedies available depending on the type of breach, the statute of limitations, and whether the injured party is the buyer or seller.

Comprehension Case

Read the text below and answer the questions.

Suppose that Smile Dentist, Inc. is buying 150 new dental chairs from Sit Back, Corp. Because the parties are long-term business partners, a contract that both parties signed included a provision that any breach of the agreement will result in damages of $1 being paid to the non-breaching party. Five years after the agreement is signed and the chairs delivered, a dispute arises when 30 percent of the chairs begin to malfunction during prolonged use. Smile Dentist sues Sit Back for its lost profits as a result of having nearly one third of its chairs out of commission. [Assume that the parties agreed to extend the statute of limitations to six years.]

Sit Back, Corp. argues that the statute of limitations bars Smile Dentist's claim. Are they correct?