contract-law breach-of-contract digital-contract
What are the legal protections to buy if seller refunds instead of delivering what was purchased, which causes monetary losses?
<p>I purchased a laptop from a manufacturer from their own website brand new. I bought the laptop because this is the only laptop which contains the feature that I require for my needs. There is no other laptop which comes close.</p>
<p>There was one in stock. The manufacturer shipped the item, but in transit, UPS damaged the package, did not attempt delivery, and returned the item back to the manufacturer due to the damage discovered.</p>
<p>The manufacturer wants to refund if the laptop inside is in damaged condition. This laptop was purchased for about $1500 during a flash sale. However, this is a much lower price then the present rate of nearly $3,000 for the same laptop.</p>
<p>Moreover, the current model and specs are out of stock. There is no comparable replacement since the prime reason for this laptop was the one feature which no other laptop has, and other lower models have lower processor or lower memory, both of which are soldered to the motherboard, making it a permanent downgrade.</p>
<p>I am willing to wait for the item to come in stock if the current item is damaged. However, I received an email that they are planning on refunding me if the item is damaged.</p>
<p>As a result, I will take a loss on this as I may not be able to purchase this laptop again at a similar price. They are willing to provide some, but not all compensation for the extreme difference of price. This would result in a monetary loss on my part.</p>
<p>I believe the seller will have breached the contract since I explicitly did not agree to a refund and only agree to receive the item I purchased at the price I purchased it, even if I have to wait. I do not mind waiting even if it takes a month or so for it to come back in stock. But, if the seller refunds, then I will be out the laptop as well as out of the money that it would take to replace the item.</p>
<p>Since it's a brand new top of the line item and the newest model, then it will definitely come back in stock again (as opposed to an older model which might be discontinued, which is not the case here).</p>
<p>What buyer protections are there for this? Will I be able to easily sue the manufacturer for monetary losses if the manufacturer refunds me anyway instead of letting me wait for the item to come back in stock?</p>

<h3>Short Answer</h3>
<p>You are legally entitled to the cost of an adequate replacement (possibly a lightly used previously owned computer) reduced by the amount refunded.</p>
<p>This is sometimes called a &quot;benefit of the bargain&quot; measure of the relief to which you are entitled.</p>
<p>But as a practical matter, there is no cost effective way of enforcing your legal rights under these facts, that doesn't deeply compromise you chances of success. But, trying to litigate the case on the cheap, because it is unlikely to succeed, makes the effort to enforce your rights even less worthwhile.</p>
<p>Your best options are those you could take outside the formal legal process (such as social media gripes, or complaining to &quot;the manager&quot; of the person you dealt with first if they refuse to give you what you want or are entitled to under the law).</p>
<h3>Long Answer</h3>
<p><strong>Applicable Law</strong></p>
<p>The default rules of law, absent an express contractual term to the contrary, are as follows:</p>
<p>In every U.S. jurisdiction in an intra-U.S. transaction, this is governed by <a href="https://www.law.cornell.edu/ucc/2/2-713" rel="noreferrer">the following section of Article 2 of the Uniform Commercial Code</a>, which apart from section and subsection numbering conventions is substantially identical in all of these jurisdictions. It states:</p>
<blockquote>
<p>§ 2-713. Buyer's Damages for Non-delivery or Repudiation.</p>
<p>(1) Subject to the provisions of this Article with respect to proof of
market price (Section 2-723), the measure of damages for non-delivery
or repudiation by the seller is the difference between the market
price at the time when the buyer learned of the breach and the
contract price together with any incidental and consequential damages
provided in this Article (Section 2-715), but less expenses saved in
consequence of the seller's breach.</p>
<p>(2)Market price is to be determined as of the place for tender or, in
cases of rejection after arrival or revocation of acceptance, as of
the place of arrival.</p>
</blockquote>
<p>In international transactions between signatory countries, the relevant body of law of the <a href="https://uncitral.un.org/en/texts/salegoods" rel="noreferrer">Convention on the International Sale of Goods (CISG) (1980)</a>. The primary applicable provisions of that Convention (to which the U.S. is a party) are:</p>
<blockquote>
<p>Article 45</p>
<p>(1) If the seller fails to perform any of his obligations under the
contract or this Convention, the buyer may:</p>
<p>(a) exercise the rights provided in articles 46 to 52;</p>
<p>(b) claim damages as provided in articles 74 to 77.</p>
<p>(2) The buyer is not deprived of any right he may have to claim
damages by exercising his right to other remedies.</p>
<p>(3) No period of grace may be granted to the seller by a court or
arbitral tribunal when the buyer resorts to a remedy for breach of
contract.</p>
<p>Article 46</p>
<p>(1) The buyer may require performance by the seller of his obligations
unless the buyer has resorted to a remedy which is inconsistent with
this requirement. . . .</p>
<p>Article 47 (1) The buyer may fix an additional period of time of
reasonable length for performance by the seller of his obligations.</p>
<p>(2) Unless the buyer has received notice from the seller that he will
not perform within the period so fixed, the buyer may not, during that
period, resort to any remedy for breach of contract. However, the
buyer is not ­deprived thereby of any right he may have to claim
damages for delay in performance.</p>
<p>Article 48</p>
<p>(1) Subject to article 49, the seller may, even after the date for
delivery, remedy at his own expense any failure to perform his
obligations, if he can do so without unreasonable delay and without
causing the buyer ­unreasonable inconvenience or uncertainty of
reimbursement by the seller of expenses advanced by the buyer.
However, the buyer retains any right to claim ­damages as provided for
in this Convention.</p>
<p>(2) If the seller requests the buyer to make known whether he will
accept performance and the buyer does not comply with the request
within a reasonable time, the seller may perform within the time
indicated in his request. The buyer may not, during that period of
time, resort to any remedy which is inconsistent with performance by
the seller.</p>
<p>(3) A notice by the seller that he will perform within a specified
period of time is assumed to include a request, under the preceding
paragraph, that the buyer make known his decision.</p>
<p>(4) A request or notice by the seller under paragraph (2) or (3) of
this article is not effective unless received by the buyer.</p>
<p>Article 49</p>
<p>(1) The buyer may declare the contract avoided:</p>
<p>(a) if the failure by the seller to perform any of his obligations
under the contract or this Convention amounts to a fundamental breach
of contract; or</p>
<p>(b) in case of non-delivery, if the seller does not deliver the goods
within the additional period of time fixed by the buyer in accordance
with paragraph (1) of article 47 or declares that he will not deliver
within the period so fixed. . . .</p>
<p>Article 74</p>
<p>Damages for breach of contract by one party consist of a sum equal to
the loss, including loss of profit, suffered by the other party as a
consequence of the breach. Such damages may not exceed the loss which
the party in breach foresaw or ought to have foreseen at the time of
the conclusion of the contract, in the light of the facts and matters
of which he then knew or ought to have known, as a possible
consequence of the breach of contract.</p>
<p>Article 75</p>
<p>If the contract is avoided and if, in a reasonable manner and within a
reasonable time after avoidance, the buyer has bought goods in
replacement or the seller has resold the goods, the party claiming
damages may recover the difference between the contract price and the
price in the substitute transaction as well as any further damages
recoverable under article 74.</p>
<p>Article 76</p>
<p>(1) If the contract is avoided and there is a current price for the
goods, the party claiming damages may, if he has not made a purchase
or resale under article 75, recover the difference between the price
fixed by the ­contract and the current price at the time of avoidance
as well as any further damages recoverable under article 74. If,
however, the party claiming ­damages has avoided the contract after
taking over the goods, the current price at the time of such taking
over shall be applied instead of the current price at the time of
avoidance.</p>
<p>(2) For the purposes of the preceding paragraph, the current price is
the price prevailing at the place where delivery of the goods should
have been made or, if there is no current price at that place, the
price at such other place as serves as a reasonable substitute, making
due allowance for differences in the cost of transporting the goods.</p>
<p>Article 77</p>
<p>A party who relies on a breach of contract must take such measures as
are reasonable in the circumstances to mitigate the loss, including
loss of profit, resulting from the breach. If he fails to take such
measures, the party in breach may claim a reduction in the damages in
the amount by which the loss should have been mitigated.</p>
</blockquote>
<p><strong>Your Legal Rights</strong></p>
<p>This brings us to the question:</p>
<blockquote>
<p>What buyer protections are there for this? Will I be able to easily
sue the manufacturer for monetary losses if the manufacturer refunds
me anyway instead of letting me wait for the item to come back in
stock?</p>
</blockquote>
<p>The buyer is legally entitled to the fair market value of obtaining a replacement (perhaps in the secondary market for used laptops) that is equivalent to what was ordered reduced by the amount of money refunded.</p>
<p><strong>Practical Vindication Of Your Legal Rights</strong></p>
<p>But it is much easier to get the refund than it is to prevail in a lawsuit for the additional damages to which the buyer is legally entitled, a prevailing buyer will probably not get their attorney fees if they prevail, and there is a good chance that the dispute will be sent to arbitration which is, generally speaking (according to strong empirical evidence) a forum with a strong anti-consumer bias (although consumer arbitration can be fairly inexpensive to litigate in, is somewhat more tolerant of lack of legal expertise by a self-represented party, and sometimes despite everything, you win, or can even get an unfair result that works in your favor rather than that of the seller).</p>
<p>If you are fighting over $1,500 to $2,500, and you have a fairly complex case to prove that will require expert testimony (and expert witness fees and court costs would be awarded to a prevailing party in addition to the actual damages to which they are legally entitled even though attorney fees are not recoverable in most cases), it will be very hard to find a lawyer willing to take the case. This is because it will take far more than 5-12 hours of attorney work to take the case to its conclusion, which is your maximum cost effective litigation budget, even if everything you win goes to the attorney and you receive no actual benefit. To get even a 50% recovery, your lawyer needs to get the job done ins 2-6 hours depending on your lawyer's hourly rate, which is close to impossible when your legal argument is as difficult to prove as it is in this case.</p>
<p>So, basically, the only cost effective way to litigate the case is without a lawyer in small claims court or consumer arbitration, even though representing yourself without a lawyer greatly reduces your chances of success on the merits.</p>
<p>On balance, you would usually be better off accepting a refund and acknowledging that you have been damaged in a manner for which the law provides no reliable and cost effective remedy, because the harm is too small.</p>
<p>Bad mouthing the offending company on social media (which sometimes results in a PR driven instead of lawyer driven, favorable resolution) would probably be a more fruitful strategy. Complaining to a manager or writing a letter to the President of the company might also be a more fruitful strategy.</p>
<p>Sometimes small disputes can be resolved with class action lawsuits, but this isn't a case where this is an option, since it involves just a single individual or a handful of individuals who are harmed. This is also not the sort of case where a state consumer protection agency or attorney general's office or federal consumer protection agency is likely to get involved, since it doesn't involve a systemic deceptive trade practice, just an unfair to you bad situation.</p>
<p><strong>Why have these laws if they are so hard to enforce in consumer cases?</strong></p>
<p>As my commercial transactions professor in law school (James J. White, the author of the leading legal treatise on the subject) was fond of saying: all legal issues become more interesting if you add more zeros to the amount in controversy.</p>
<p>If the computer system you bought had a price of $150,000 that had since gone up to $300,000, this dispute would absolutely be worth litigating. Furthermore, since you could litigate it adequately on the litigation budget that this amount in controversy would make possible, your prospects of successfully vindicating your rights as a buyer, at only a modest discount for unrecoverable litigation costs, would be much greater.</p>
<p>Essentially, our system is designed to get close to justice in the most important disputes, as measured by the amount in controversy, while it tolerates small injustices that are not as damaging (in raw absolute dollar terms) as big disputes.</p>
<p>This is unfair, but the source of this unfairness is intrinsic to the nature of the problem (rather than simply being a matter of artificial bias created by the people who designed the civil justice system).</p>
<p>Also, this unfair bias comes close to maximizing the aggregate improvement in economic value that the legal system as a whole can provide for a given legal of expenditure on this system.</p>
<p>Basically, at a fundamental economic level, the economic costs of justly resolving small wrongs can be greater due to the deadweight loss of litigation expenses for the economy as a whole, than the economic benefits of resolving the wrongs fairly (which provides not only justice to those involved but also provides an incentive to act justly in future transactions before one knows whether a problem or dispute will arise).</p>
