When a buyer refuses to accept goods that have already been manufactured by the seller, which of the following is true regarding the seller’s computation of damages?

• The seller may compute damages based on the difference between the contract price and the market price at which the goods are currently selling; and, if this does not put the seller in as good a financial position as if the contract had been performed, the seller may base damages based on lost profit and overhead.

Explanation:

When the buyer unjustifiably rejects goods when they have been produced, the seller has several options to compensate for the damages. The four alternatives that UCC provides the seller are as follows: First, the unpaid contract price. Second, the contract price minus resale price. Third, the difference between the value of the goods at the prevailing market price and the unpaid contract price. Fourth and final alternative is the profit plus reasonable overhead, which comes into play when the other alternatives does not put the seller in a better financial position as far as the contract is concerned.