UCC Article 2, Section 714:

2-714. Buyer's Damages for Breach in Regard to Accepted Goods.

(1) Where the buyer has accepted goods and given notification (subsection (3) of Section 2-607) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.

(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance betweenthe value of the goods acceptedandthe value they would have had if they had been as warranted,unless special circumstances show proximate damages of a different amount.

(3) In a proper case any incidental and consequential damages under the next section may also be recovered.

First, read the case below. Then, answer the accompanying questions.

Suppose Nigel sells Blair a watch for $200. Nigel tells Blair (warrants) it is an antique Rolex he inherited from his dead grandfather, but in fact, it is a fake; he bought on the streets of New York City. The fake watch is worth $50, but if it had been a genuine antique Rolex, it would be worth $600. In this scenario, Nigel is in breach of contract and could be sued.

Questions(Be sure to answer all three):

1. This case involves a contract for the sale of goods, and thus the contract is governed by the Uniform Commercial Code. (See Section 2-714 above) How does the UCC calculate compensatory damages for the sale of a good?
2. Under the UCC, how much would Nigel owe Blair in compensatory damages? (See Section 2-714 above)
3. Suppose the courts determine that Nigel engaged in the reprehensible conduct of fraud when he lied about the authenticity of the Rolex. What is one factor that would be highly determinative of how much money Blair would receive in punitive damages?