URGENT. HELP!!!!! How much does Mr. Coyote owe Mr. Rabbit?

Question

Mr. Coyote owns a joke shop and he sold various products from Removable Holes In The Wall to TNT. He sold disappearing/reappearing ink to Mr. Rabbit for $100. The label clearly said that the ink would disappear immediately but would reappear after 5 minutes. At the time of the sale, Mr. Rabbit told Mr. Coyote that Mr. Rabbit was going to use the ink to sign a contract with Disney Studios for $7500. Mr. Rabbit was excited to see the faces of the serious and stodgy Disney executives when the ink disappeared and then reappeared. Mr. Coyote assured Mr. Rabbit that the ink would reappear in 5 minutes.

Anyways, Mr. Rabbit used the ink when he made a movie deal with Disney Studios for $7,500 to say one word in a movie, which was "Pleeeeease." He met the Disney executives at the Disney Concert Hall located at 111 South Grand Avenue, Los Angeles, CA 90012. The contract was signed in the ink purchased from Mr. Coyote. Mr. Rabbit thought it would be funny that his signature disappeared initially but then would reappear. The problem is that Mr. Rabbit's signature disappeared but never reappeared. After the contract was signed, The Disney Studio people and Mr. Rabbit went to lunch. The signature disappeared and Mr. Rabbit was laughing when this happened. After the two hour lunch, the signature never appeared. The signature never reappeared. The Disney Studio did not see the humor in this and hired another person for half the price to do the work.

Mr. Rabbit immediately writes to Mr. Coyote to pay him back but the letter was ignored.

I thought that Mr. Coyote owes $7600 (cost of the pen:$100 + damages from the pen: $7500)

Answer 1

Answer: Mr. Coyote may owe Mr. Rabbit up to $7,600, but the full amount is not automatically recoverable.

Let's break this down using contract law.

1. Breach of Warranty: $100

Mr. Coyote sold Mr. Rabbit disappearing ink for $100 and expressly assured him that the ink would reappear after five minutes.

However, the ink never reappeared.

This is a potential breach of express warranty because the product failed to perform as promised.

Mr. Rabbit therefore has a strong argument for recovering the $100 purchase price, assuming he properly rejects or revokes acceptance of the defective product, or otherwise establishes equivalent damages.

2. Consequential Damages: $7,500

Consequential damages are additional losses caused by a breach of contract that the seller had reason to know might occur.

In this situation, Mr. Rabbit specifically told Mr. Coyote that he intended to use the ink to sign a $7,500 contract with Disney Studios.

Therefore, Mr. Coyote knew the ink was being purchased for an important business transaction.

Because Mr. Coyote assured Mr. Rabbit that the ink would reappear, Mr. Rabbit may argue that the seller should have reasonably anticipated financial losses if the product failed.

This supports a potential claim for consequential damages.

However, Mr. Rabbit must also establish that:

1. The defective ink caused him to lose the Disney contract.
2. The financial loss was reasonably foreseeable.
3. The amount of the loss can be established with reasonable certainty.
4. He could not reasonably have prevented or reduced the loss.

3. Is the Entire $7,500 Recoverable?

Not necessarily.

The $7,500 represents the contract payment Mr. Rabbit expected to receive, but his recoverable economic loss would generally be the net financial benefit he lost, rather than automatically the entire contract price.

For example, if Mr. Rabbit would have incurred $500 in expenses to complete the movie appearance, his lost profit might be $7,000 rather than $7,500.

There is also a question of causation. Disney's decision to hire someone else does not automatically establish that the defective ink legally caused the entire loss.

Mr. Rabbit would need to show that the contract was otherwise enforceable and that Disney's withdrawal was attributable to the ink failure.

4. Calculating the Potential Damages

Purchase price: $100

Potential consequential damages: $7,500

Total potential recovery: $7,600

This calculation assumes that the entire $7,500 represents a recoverable loss and that Mr. Rabbit satisfies the legal requirements for consequential damages.

Final Answer:

Mr. Rabbit has a strong potential claim against Mr. Coyote for breach of express warranty because the disappearing ink failed to reappear as promised.

He may also recover consequential damages because Mr. Coyote knew the ink would be used to sign a $7,500 movie contract.

Therefore, $7,600 is a possible recovery, but it is not a guaranteed amount. The final award would depend on proof of causation, foreseeability, the actual financial loss, and whether Mr. Rabbit could reasonably have avoided the damages.

Under California law, which may be relevant given the Los Angeles location, California Commercial Code Sections 2313 and 2715 address express warranties and consequential damages involving sales of goods.