Court Of Chancery Explains Contract Damages

Henkel Corporation v. Innovative Brands Holdings LLC,  C.A. 3663-VCN (January 31, 2013)

When a buyer breaches a contract to buy a business, how are the seller's damages to be calculated?  This is not as easy as it sounds.  For if the seller finds a new buyer and demands damages equal to any dimunition in the sale price, the defaulting buyer will claim the duty to mitigate requires the loss be offset by any income earned prior to the later successful sale.  How do you decide what that is?  This decision carefully analyzes this issue.  The short answer is it depends on the conduct of the parties after the breach.

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