Adam contracts to sell Ben 100 widgets for $100, for use in Ben's factory. Adam does not know that Ben's factory is closed as it is waiting for the supply of widgets from Adam. Which of the following statements is true of the damages caused due to late delivery?
A) Adam will be liable for compensatory damages.
B) Adam will be liable for consequential damages.
C) Adam will not be liable for consequential damages.
D) Adam will be liable for nominal damages.

Question

Quizplus · Accepted Answer

In the above case, Adam will not be liable for consequential damages. Consequential damages are not recoverable unless the defendant had reason to foresee them at the time the contract was created. Generally, this means that the defendant must have known of the special circumstances that caused the loss.

Adam Contracts to Sell Ben 100 Widgets for $100, for Use