Chronister Oil Co. v. Unocal Refining and Marketing
United States Court of Appeals for the Seventh Circuit
34 F.3d 462 (7th Cir. 1994)
Chronister (defendant) contracted to sell gasoline to Unocal (plaintiff) at 60.4 cents per gallon, but the delivered gasoline contained too much water and was rejected; Unocal refused Chronister's offer of a replacement delivery and instead diverted gasoline from its own existing inventory to cover its needs, even though the actual market price at the time (about 55 cents per gallon) was lower than the contract price. The district court found Chronister breached and awarded Unocal $26,000 based on the difference between the contract price and Unocal's average inventory cost, and Chronister appealed.
Whether a buyer may recover cover damages under UCC § 2-712 for a seller's breach when the buyer did not actually purchase replacement goods on the market but instead used its own existing inventory to meet its needs.