Opinion ID: 1096663
Heading Depth: 2
Heading Rank: 2

Heading: whether damages were appropriate in light of this court's finding in issue i.

Text: ¶ 12. After he found that Smith was required to purchase all fill dirt for the project from the Cobbs, the chancellor awarded damages to the Cobbs based on the amount of fill dirt purchased by Smith from third parties. Based on the parties' testimony, the chancellor determined the amount of fill dirt needed for the project to be 706,553.3 cubic yards. He then found that the 262,837 cubic yards of dirt not purchased from the Cobbs [1] multiplied by $0.40 per yard, the stated contract price, was the measure of damages and awarded such to the Cobbs. ¶ 13. Smith claims that the chancellor abused his discretion in awarding damages for the 262,837 cubic yards of dirt not purchased from the Cobbs, since the contract estimated the amount of dirt needed for the project to be 550,000 cubic yards. Smith contends that the chancellor's award of damages essentially requires him to purchase 23% more dirt than anticipated under the contract which is unreasonably disproportionate to the stated estimate in the contract. ¶ 14. Smith relies on Miss.Code Ann. § 75-2-306(1) (Rev.2002), which states in part as follows: A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate ... may be tendered or demanded. ¶ 15. Smith contends that the unreasonably disproportionate language refers to the volume of goods to be purchased under a requirements contract, not to damages for breach of a requirements contract. Smith incorrectly interprets the statute, which clearly refers to the terms of a contract and the performance of the contract. See, e.g., Chem. Distribs., Inc. v. Exxon Corp., 1 F.3d 1478, 1483 (5th Cir. 1993). ¶ 16. Although Smith's argument is without merit, we find that the chancellor's award of damages was clearly erroneous. The principle governing breaches of sales contracts is to give the aggrieved party the benefit of the contract by putting the party in as good a position as the party would have been in had the breaching party performed the agreement. The appropriate measure of damages is found in Miss.Code Ann. § 75-2-708 (Rev. 2002), Seller's damages for nonacceptance of goods or repudiation of the sales contract. See, e.g., Chem. Distribs., 1 F.3d at 1486. Subsection (1) provides for damages equal to the difference between the agreed price and the market value of the goods. If subsection (1)'s damages are inadequate, subsection (2)'s measure of damages, the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages, applies. The chancellor awarded the Cobbs the full sales price as damages. Because the Cobbs are still in possession of the dirt they were to sell and presumably could still sell, they are entitled only to the lost profits and any incidental damages under § 75-2-708. ¶ 17. Presiding Justice McRae, in his separate opinion, argues that the chancellor's calculation of damages was correct and should be affirmed. Use of this calculation, however, would result in unjust enrichment because the Cobbs would receive lost profits and still be in possession of the fill dirt, which they could sell to another purchaser. The Cobbs would be paid almost double what the fill dirt was worth in the first place, making Presiding Justice McRae's calculation of damages highly inequitable and contrary to well-established law. ¶ 18. We reverse the chancellor's award of damages and remand this case for a recalculation of damages under these guidelines.