Wednesday, April 12, 2006

S.C. Supreme Court holds that "lost volume seller doctrine" does not eliminate duty to mitigate

In Collins Entertainment v. Coats & Coats, the Supreme Court considered whether the lost volume seller doctrine eliminates the duty to mitigate damages. Under this doctrine, "if the injured party could and would have entered into the subsequent contract, even if the contract had not been broken, and could have had the benefit of both, he can be said to have lost volume and the subsequent transaction is not a substitute for the broken contract."

In this case, the Court held that the lost volume seller doctrine does not eliminate a seller's duty to mitigate his damages. The doctrine simply recognizes that, in situations in which the seller has excess capacity and would, in any event, have made both sales, the lost volume measure of damages is necessary to place the seller in the same position he would have been had the buyer not repudiated.

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