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TERADYNE, INC. v. TELEDYNE INDUSTRIES, INC. Case Brief
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Case Brief Summary & Legal Analysis
tl;dr: A buyer breached a contract for a complex machine. The seller, a “lost volume seller,” resold the unit. The court addressed how to calculate lost profits under UCC § 2-708(2), clarifying that direct labor costs for post-fabrication handling, not just materials, must be deducted from the contract price.
Legal Significance: This case clarifies the calculation of a “lost volume seller’s” damages under UCC § 2-708(2). It establishes that direct labor costs for employees like testers and installers must be deducted from the contract price to determine lost profit, distinguishing them from general overhead.
TERADYNE, INC. v. TELEDYNE INDUSTRIES, INC. Law School Study Guide
Use this case brief structure for your own legal analysis. Focus on the IRAC methodology to excel in law school exams and cold calls.
Case Facts & Court Holding
Key Facts & Case Background
Plaintiff Teradyne, Inc. contracted to sell a T-347A transistor test system to defendant Teledyne Industries, Inc. for $98,400. Teledyne repudiated the contract. Teradyne, a manufacturer with the capacity to produce more units than it could sell, was a “lost volume seller.” It subsequently resold the specific unit intended for Teledyne to another customer. Teradyne sued for lost profits under UCC § 2-708(2). In calculating damages, Teradyne deducted only the material and fabrication costs as listed in its internal inventory catalog, which was prepared for tax purposes and showed low valuations. Teradyne argued that other labor costs—for employees involved in testing, shipping, installation, and servicing—were fixed overhead and should not be deducted, as these costs would have been incurred regardless of the single Teledyne sale. Teledyne countered that these were variable, direct costs that should have been deducted to accurately reflect the profit lost on the specific sale. A master, affirmed by the district court, sided with Teradyne, awarding it $75,392 in damages based on its calculation.
Court Holding & Legal Precedent
Issue: In calculating a lost volume seller’s damages under UCC § 2-708(2), must direct labor costs for employees who handle the product post-fabrication, such as testers and installers, be deducted from the contract price as costs saved rather than being treated as part of “reasonable overhead”?
Yes. The court held that wages and fringe benefits for employees who Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupid
IRAC Legal Analysis
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Legal Issue
In calculating a lost volume seller’s damages under UCC § 2-708(2), must direct labor costs for employees who handle the product post-fabrication, such as testers and installers, be deducted from the contract price as costs saved rather than being treated as part of “reasonable overhead”?
Conclusion
This case provides a crucial interpretation of UCC § 2-708(2), refining the Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo conse
Legal Rule
Under UCC § 2-708(2), a lost volume seller whose damages under § Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, s
Legal Analysis
The court first affirmed that UCC § 2-708(2) was the appropriate remedy. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur
Flash-to-Full Case Opinions
Flash Summary
- For a “lost volume seller,” UCC § 2-708(2) damages are the