Chatlos Systems, Inc. v. National Cash Register Corp.
United States Court of Appeals for the Third Circuit
670 F.2d 1304 (1982)
Chatlos Systems, Inc. (plaintiff) bought an NCR 399/656 computer system for $46,020 from National Cash Register Corp. (NCR) (defendant), which warranted the system would perform specified functions Chatlos needed. The system failed to perform those functions, and Chatlos sued for breach of warranty. At trial, an expert testified that a system that actually performed all warranted functions would be worth $100,000 to $150,000, and NCR employees confirmed a system meeting those needs would be two pricing tiers above what was sold. The trial court awarded Chatlos $201,826.50 plus interest, and NCR appealed.
Whether, under UCC § 2-714(2), the correct measure of damages for breach of warranty is the difference between the fair market value of the goods as accepted and the value they would have had if they had been as warranted.