In White v. Farrell,1 the New York Court of Appeals ruled that the measure of damages for a buyer’s breach of a contract to sell real property, where the contract does not contain a liquidated damages clause as the seller’s exclusive remedy,2 is the difference between the contract price and the fair market value of the property on the date of the breach. In so ruling, the court, citing to Williston on Contracts, professed to follow the rule of decision adhered to by the "majority of jurisdictions" and what it found to be the "longstanding rule in New York" that "the four departments of the Appellate Division…have consistently endorsed," even though the court itself had "never considered the measure of damages for a buyer’s breach of a contract to sell real property."
This article will question the basis for the court’s ruling and show that the concurring opinion, which disagreed with the majority’s rationale, set forth what would have been a better rule of damages in buyer default cases. It will also posit that the court’s preferred rule renders the measurement of damages in such cases an almost irrelevant issue with unfair results for a seller victimized by a buyer’s default.
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