Explain why the seller would renegotiate for breach

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Question: At time 0, the buyer pays for the seller's promise to deliver good g at time 2, where g is a differentiated good. Assume that the numbers given in the preceding question indicate the price of the closest substitute (which is not very close) and the extent of the buyer's reliance. The seller's costs of performing rise unexpectedly; so, the seller and the buyer bargain in an attempt to renegotiate the contract. Explain why the seller would rather renegotiate in circumstances in which the court gives reliance damages for breach rather than those in which the court gives expectation damages for breach.

Reference no: EM131908450

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