Fertico Belgium S.A. v. Phosphate Chemicals Export Ass'n
Court of Appeals of New York
510 N.E.2d 334 (1987)
Fertico (plaintiff), a fertilizer trader, paid Phoschem (defendant) $1.7 million by letter of credit for a first shipment Phoschem knew Fertico needed on time to fulfill its own resale contract with Altawreed. Phoschem delivered nearly a month late; Fertico canceled the second shipment, bought substitute fertilizer from Unifert at a $700,000 premium to meet its Altawreed obligations, and separately paid Altawreed extra to accept delayed delivery. Fertico was also stuck with 15,000 tons of the late-delivered fertilizer it no longer needed (since payment had already been drawn), which it resold to a third party, Janssens, for a $454,000 profit. Fertico sued Phoschem for $1.25 million; the jury awarded $1.07 million, but the appellate court reversed, holding the $700,000 Altawreed gain and $454,000 Janssens profit should offset Fertico's damages since Fertico wouldn't have earned them but for the breach.
Whether gains a buyer realizes from successfully covering after a seller's breach must be deducted from the buyer's damages, when those gains could have been realized independent of the breach.