Colorado § 4-2-715 - Buyer's incidental and consequential damages.

§ 4-2-715. Buyer's incidental and consequential damages.

(1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses, or commissions in connection with effecting "cover" and any other reasonable expense incident to the delay or other breach.

(2) Consequential damages resulting from the seller's breach include:

(a) Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) Injury to person or property proximately resulting from any breach of warranty.

Source: L. 65: p. 1340, § 1. C.R.S. 1963: § 155-2-715.

ANNOTATION

Annotator's note. Since § 4-2-715 is similar to repealed § 121-1-70, C.R.S. 1963, and § 121-1-70, CRS 53 (uniform sales act), relevant cases construing those provisions have been included in the annotations to this section.

Interest and carrying charges are consequential damages. Where the goods purchased are entirely worthless and the only way buyer can be made whole is by awarding him the full amount of the obligation he undertook to pay at the time he purchased the goods, then the interest and carrying charges incurred at the time the sale was made are clearly consequential damages directly resulting from the breach of warranty. Cherokee Inv. Co. v. Voiles, 166 Colo. 270, 443 P.2d 727 (1968).

Special damages where machine is unsuitable. Where there is a breach of a special warranty whereby a seller undertakes to build a machine suitable for a mass production purpose, the buyer is entitled to special damages for its expenditure in the manufacture of the tools and dies to be used with the machine and to those expenditures reasonably attributed to efforts to adjust and repair the machine before the date when notice of breach of warranty was given to the buyer. Comet Indus., Inc. v. Best Plastic Container Corp., 222 F. Supp. 723 (D. Colo. 1963).

The claim of a buyer for damages for loss of profits cannot be allowed where these were not sufficiently proven and where they are in law remote. Comet Indus., Inc. v. Best Plastic Container Corp., 222 F. Supp. 723 (D. Colo. 1963).

Code rejects "tacit agreement" test. The Colorado statutory scheme rejects the "tacit agreement" test that would permit consequential damages only if the seller specifically contemplated or actually assumed the risk of such damages. Prutch v. Ford Motor Co., 618 P.2d 657 (Colo. 1980).

The element which triggers recovery of consequential damages under subsection (2)(a) is foreseeability. Subsection (2)(a) means that consequential damages are recoverable whenever those damages were reasonably foreseeable by the seller when he entered the contract. Prutch v. Ford Motor Co., 40 Colo. App. 129, 574 P.2d 102 (1977), rev'd on other grounds, 618 P.2d 657 (Colo. 1980).

Where a buyer's use of a product which he knows is defective is foreseeable, the seller's liability for consequential damages is not cut off. Prutch v. Ford Motor Co., 40 Colo. App. 129, 574 P.2d 102 (1977), rev'd on other grounds, 618 P.2d 657 (Colo. 1980).

A manufacturer knowing that its products will be used for crop production reasonably can be expected to foresee that defects in those products may cause crop losses. Prutch v. Ford Motor Co., 618 P.2d 657 (Colo. 1980).

"Reason to know" formulation not exclusive remedy in fraud suits. The code does not require that the "reason to know" formulation be applied in fraud suits to the exclusion of other remedies; it only provides that the remedies available under the "reason to know" formulation are included among the remedies available to a defrauded purchaser. Wagner v. Dan Unfug Motors, Inc., 35 Colo. App. 102, 529 P.2d 656 (1974).

Attempt to mitigate losses not intervening cause of damages. Where plaintiffs, in deciding to continue farming with the knowledge that their equipment might continue to malfunction, actually mitigated their losses, their decision to try to produce at least part of a normal crop, rather than no crop at all, was required by their "duty to lessen, rather than increase", their damages and was not an intervening cause of damages. Prutch v. Ford Motor Co., 618 P.2d 657 (Colo. 1980).

Section clearly permits approximations as to extent of damage, providing the fact of damage or lost profits is certain. Eccher v. Small Bus. Admin., 643 F.2d 1388 (10th Cir. 1981).

Proof of true value of the goods as compared to the contract price is relevant where a warranty remedy is sought. Power Equip. Co. v. Fulton, 32 Colo. App. 430, 513 P.2d 234 (1973).

Court's determination of damages will not be disturbed on appeal unless clearly erroneous. Eccher v. Small Bus. Admin., 643 F.2d 1388 (10th Cir. 1981).

Error of omission in instructing on warranty theory of liability. Where the jury specifically rejected a warranty theory of liability, any error of omission in instructing on this theory is harmless error. Power Equip. Co. v. Fulton, 32 Colo. App. 430, 513 P.2d 234 (1973).

Evidence of loss of profit is admissible in determining amount of consequential damages if the prospective loss has been shown with reasonable certainty. Cope v. Vermeer Sales, 650 P.2d 1307 (Colo. App. 1982); Int'l Tech. Instruments v. Eng'g Measurements, Inc., 678 P.2d 558 (Colo. App. 1983).

But the absence of prior profits in a newly established business does not create a "per se" exclusion of loss of profit as an item of damages if sufficient competent evidence is proffered. Cope v. Vermeer Sales, 650 P.2d 1307 (Colo. App. 1982); Int'l Tech. Instruments v. Eng'g Measurements, Inc., 678 P.2d 558 (Colo. App. 1983).

This section specifically allows buyers to recover consequential damages resulting from the seller's breach. There is no corresponding provision in the code allowing the seller to recover consequential damages. Jelen & Son, Inc. v. Bandimere, 801 P.2d 1182 (Colo. 1990).

Applied in Caldwell v. Kats, 38 Colo. App. 156, 555 P.2d 190 (1976); Duncan v. Schuster-Graham Homes, Inc., 194 Colo. 441, 578 P.2d 637 (1978); Cement Asbestos Prods. Co. v. Hartford Accident & Indem. Co., 592 F.2d 1144 (10th Cir. 1979); W. Conference Resorts, Inc. v. Pease, 668 P.2d 973 (Colo. App. 1983).