Lazenby Garages Ltd v Wright [1976] 1 WLR 459

Lazenby Garages agreed to sell Wright a particular second-hand BMW for £1,670. Wright refused to proceed and did not accept delivery. The dealer later sold that vehicle to another buyer for £100 more. It nevertheless claimed the profit it would have made on the original sale, arguing that the later customer could otherwise have bought another comparable vehicle. The dispute concerned whether the resale replaced the lost transaction or whether the dealer had genuinely lost the volume of an additional sale. The individual characteristics of second-hand cars were material to that question.

Had the dealer proved a lost profit despite reselling the same second-hand car at a higher price, or did the resale eliminate substantial loss from the buyer's breach?

The Court of Appeal held that the dealer had not established the claimed loss of profit and was entitled only to nominal damages. It resold the same second-hand car for more than the agreed price, so the replacement sale removed the asserted loss on that transaction. The dealer had not proved that the later customer would otherwise have purchased a separate equivalent car from it. Second-hand vehicles were not interchangeable stock in the same way as an unlimited supply of identical new goods might be. The court therefore rejected the proposed lost-volume analysis on the evidence. The buyer's breach remained a breach, but substantial compensation required an actual compensable loss.

A resale may eliminate the seller's loss where it substitutes for the repudiated transaction. A lost-volume claim requires proof that the seller would otherwise have made both sales; that cannot simply be assumed for an individual second-hand item sold later at a higher price.

Lazenby distinguishes proof of breach from proof of substantial loss. It also explains why resale does not have a uniform effect: it may replace the lost bargain or represent an additional sale that would have occurred anyway. The latter requires evidence of capacity and demand. Avoid an absolute unique-versus-fungible rule divorced from the facts. The compensatory inquiry compares the seller's actual position with the position if this buyer had performed, including the nature of the goods and the role of the later transaction.