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FERTICO BELGIUM S. A. v. PHOSPHATE CHEMICALS EXPORT ASSOCIATION (05/15/86)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT 1986.NY.46217 <http://www.versuslaw.com>; 501 N.Y.S.2d 867; 120 A.D.2d 401 May 15, 1986 FERTICO BELGIUM S. A., RESPONDENT,v.PHOSPHATE CHEMICALS EXPORT ASSOCIATION, INC., APPELLANT Concur -- Kupferman, J. P., Sullivan, Ross, Kassal and Rosenberger, JJ.


Concur -- Kupferman, J. P., Sullivan, Ross, Kassal and Rosenberger, JJ.

Judgment, Supreme Court, New York County (A. Klein, J.), entered January 7, 1985, upon a jury verdict, which awarded plaintiff $1,070,000 damages, plus interest, costs, and disbursements on plaintiff's second cause of action, and dismissed the first cause of action, unanimously modified, on the law, the award of damages vacated, the matter remanded for a new trial on the limited issue of damages on the second cause of action to be determined on the basis of $352,500 less plaintiff's net profit on the resale of defendant's goods accepted by plaintiff, and, as modified, affirmed, without costs.

The limited issue presented on this appeal is whether a buyer's measure of damages for cover under Uniform Commercial Code ยง 2-712 permits recovery of cover damages in addition to profits realized on a renegotiated sale of the accepted goods in a rising market. We hold that the remedy of cover does not include such profits. Accordingly, we modify the judgment to vacate the award and to remand the matter for a new trial on the limited issue of damages.

Plaintiff Fertico Belgium S. A. (Fertico) was a Belgian corporation, headquartered in Brussels and engaged in international trade of fertilizer. Defendant Phosphate Chemicals Export Association, Inc. (Phoschem) is a nonprofit Delaware corporation engaged in the export sale of phosphate fertilizer. Its nine members are domestic producers of such fertilizer.

 In October 1978, Phoschem entered into a contract with Fertico to deliver to Antwerp, Belgium, 15,000 tons of fertilizer between November 1 and 15, 1978, but no later than November 20, 1978, and to deliver an additional 20,000 tons between November 15 and November 30, 1978. Shipment was to be made on each installment 15 days after receipt of plaintiff's letter of credit. Plaintiff purchased the fertilizer to fulfill its agreement with Altawreed, Iraq's agricultural ministry. Although plaintiff timely opened the requisite letter of credit for the first shipment on October 26, 1978, the shipment was delayed, at least in part due to the chosen shipping route via Hamburg, West Germany, initially, and only then to Antwerp. The goods did not arrive until December 17 and were not unloaded until December 21, 1978. Fertico canceled the second shipment.

Having advance notice that the delivery would not arrive in time for Fertico to meet its commitment to Altawreed, Elias F. El-Alam, Fertico's founder, president, chairman, and majority shareholder, took steps to cover for the goods. He purchased substitute fertilizer in Lebanon costing $700,000 more than he had agreed to pay Phoschem. He then renegotiated his sales agreement with Altawreed, which held plaintiff's performance bond for approximately $1,000,000. In exchange for an extension of time and a higher ...


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