Expectation damages under common law when the seller breaches are equal to

• A. The difference between the contract price and the seller's lost profits.
• B. The difference between the cost to cover and the contract price.
• C. The contract price plus lost profits.
• D. Nominal damages only.

Answer: (B)

When a seller breaches, the goal is to put the buyer in the position they would have been in if the contract had been performed. For a buyer, that means the damages are measured by the extra amount the buyer has to pay to obtain substitute goods, i.e., the difference between the cost to cover and the contract price. This captures the loss caused by having to buy elsewhere due to the breach. Incidental costs tied to obtaining and transporting the substitute goods can also be added, but the core measure is cost to cover minus the contract price. The other options don’t reflect the buyer’s actual loss: the contract price minus the seller’s profits isn’t the buyer’s damage, adding lost profits to the contract price isn’t the correct calculation, and nominal damages would only apply if there were no actual loss. If the buyer doesn’t cover, damages can be measured by the market price at breach minus the contract price, but the cover-based measure is the standard expression of the remedy here.