Contract Breach Damages: Market Price vs. Replacement Cost

A claim for damages arose from a contractual breach where one party failed to deliver goods as stipulated in a sales agreement, leading the injured party to acquire substitute goods from a third party at a higher price. The appellate court upheld the first instance ruling that the seller was liable for the difference between the contract price and the higher price paid for the replacement goods, as this constituted foreseeable and direct damages resulting from the non-performance. The supreme court quashed the decision, reasoning that the direct damage resulting from the failure to deliver is the difference between the contract price and the market price at the time and place of delivery, and damages based on a subsequent replacement purchase from a third party are only admissible if the injured party demonstrates that the price paid was objectively the lowest available alternative or that the acquisition was necessary to avoid greater loss.