Law for Business 12th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 7

Barr purchased from Crow's Nest Yacht Sales a 31-foot Tiara pleasure yacht manufactured by S-2 Yachts. He had gone to Crow's Nest knowing the style and type yacht he wanted. He was told that the retail price was $102,000 but that he could purchase the model they had for $80,000. When he asked about the reduction in price, he was told that Crow's Nest had to move it because there was a change in the model and they had new ones coming in. He was assured that the yacht was new, that there was nothing wrong with it, and that it had only 20 hours on the engine. Barr installed a considerable amount of electronic equipment on the boat. When he began to use it, he experienced tremendous difficulties with equipment malfunctions. On examination by a marine expert, it was determined that the yacht had earlier been sunk in salt water, resulting in significant rusting and deterioration in the engine, equipment, and fixtures. Other experts concluded that significant replacement and repair were required, that the engines would have only 25 percent of their normal expected life, and that following its sinking, the yacht would have only half of its original value. Barr then brought suit against Crow's Nest and S-2 Yachts for breach of warranty. To what measure of damages is Barr entitled to recover for breach of warranty?