Here is a timeline for breach of contract that leads to litigation. On Jan. 1, A contracts to deliver a widget to B on June 1 at a price of $2 to be paid on delivery. On April 1, A renounces the contract. At that time, B can buy a widget for immediate delivery for $3, or B can contract with C to deliver a widget on June 1 at a price of $3.25. B does not buy a widget for immediate delivery or contract for future delivery. On June 1, B’s suit against A succeeds. The court finds that A breached the contract on April 1. The court wants to give B perfect expectation damages. On June 1, B can buy a widget for $4.
a. Should the court give damages of $1.25, $2, $3, $3.25, $4, or $5? Why?
b. Should the award depend on whether B bought a widget on April 1, or signed a contract with C on April 1, or bought a widget on June 1?