Opinion ID: 1282691
Heading Depth: 1
Heading Rank: 2

Heading: resale price differential

Text: The catalog of a seller's remedies in a breach of contract case governed by the sale of goods provisions of the Uniform Commercial Code is found in RCW 62A.2-703. In the present case, the catalog of available remedies can quickly be reduced to two; these are: 1. Resale and recovery under RCW 62A.2-706, or 2. Recovery of the difference between the contract price and the market price under RCW 62A.2-708(1). At trial Sprague apparently proceeded, pursuant to RCW 62A.2-706, to recover as damages the difference between the resale price and contract price. RCW 62A.2-706(1) provides that if the seller acts in good faith and in a commercially reasonable manner, he may recover the difference between the resale price and the contract price, together with any incidental damages allowed under RCW 62A.2-710, less expenses saved. RCW 62A.2-706(2) goes on to permit resale at public or private sale. Of critical importance here is the requirement of RCW 62A.2-706(3) which provides that where an aggrieved seller resells goods which are the subject of a breach at a private sale, he must give the buyer reasonable notification of his intention to resell. In response to his failure to give specific notice of intention to resell, and in support of his judgment, Sprague argues: that the lack of notice was an affirmative defense which the buyer failed to plead, or that the buyer, from all the surrounding facts and circumstances, knew or should have known that the seller was going to resell the logs. [1] We deal first with whether the buyer needed to plead affirmatively as a defense the admitted lack of actual notice. This issue has not been previously addressed in Washington and only a few courts have reached this issue. Notice has been termed a prerequisite and a condition precedent to section 2-706 damage claims. 3 A. Squillante & J. Fonseca, Williston on Sales § 24-7, at 417 (4th ed. 1974); Twin Bridges Truck City, Inc. v. Halling, 205 N.W.2d 736 (Iowa 1973). The burden of showing compliance with the notice requirement has been placed on the seller. Anheuser v. Oswald Refractories Co., 541 S.W.2d 706 (Mo. Ct. App. 1976); Nipkow & Kobelt, Inc. v. Slifka, 18 U.C.C. Rep. Serv. 1213 (N.Y. App. Term 1976); Twin Bridges Truck City, Inc. v. Halling, supra . Williston has analyzed the issue as follows: Assuming that the seller has an affirmative duty to meet the requirements of § 2-706, a showing by the seller of compliance with this section would make it unnecessary for the buyer to raise a defense of lack of notice. All the buyer need do is show contradictory evidence of the seller's statement that he gave notice of his intention to resell. 3 A. Squillante & J. Fonseca, Williston on Sales § 24-7, at 418 (4th ed. 1974). This analysis, which finds notice as a prerequisite to bringing the claim, fits well with Washington law on affirmative defenses. CR 8(c) enumerates certain specific affirmative defenses which must be pleaded, but includes a general clause and any other matter constituting an avoidance or affirmative defense. While this language is very general, it clearly contemplates matters which are in avoidance or are a specific affirmative defense. It would follow, therefore, that if notice of intent to resell is part of the seller's prima facie case, then lack of such notice would not have to be affirmatively denied. To recover under RCW 62A.2-706, Sprague was required to give notice of intent to resell. This is an element of the seller's right to invoke the remedies of RCW 62A.2-706. Therefore, the buyer need not plead as an affirmative defense those elements which seller must prove. Next, can the notice requirement be satisfied by the fact that the buyer knew or should have known that the seller intended to resell? From the plain language of RCW 62A.2-706, the giving by the seller of notice of intention to resell is a specific requirement to entitle seller to claim as damages the difference between resale price and the contract price. The words of subsection (3) are precise: the seller must give the buyer reasonable notification of his intention to resell. (Italics ours.) RCW 62A.2-706(3). [2] Sprague contends Sumitomo knew or should have known that Sprague would make a resale and hold Sumitomo liable for the difference in resulting recovery. Thus, he argues that there was substantial compliance with the notice requirement. Sprague would have us hold that his filing of a lawsuit is sufficient notice. Whether such filing could ever be adequate notice is not before us. Factually, what is before us is a complaint that alleges a breach of contract and subsequent damages. It gives no notice of the remedy claimed other than damages. It was not an adequate substitute for the statutorily required notice of intent to resell.