Where a plaintiff who has received defective goods as part of a business acquisition replaces those goods and recoups the replacement cost from customers in the ordinary course of business, the plaintiff has avoided the loss and cannot recover the replacement cost as damages. The British Westinghouse avoided loss principle applies where the recoupment arises directly from the breach and in the ordinary course of business. A contract for the sale of a business (including stock-in-trade) should not be treated as a contract for the sale of goods for the purpose of assessing damages under s 54(3) of the Sale of Goods Act 1923 (NSW).
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