Hydro-King, Inc., a high-volume pleasure boat retailer, entered into a written contract with Zuma, signed by both parties, to sell Zuma a power boat for $12,000. The manufacturer's price of the boat delivered to Hydro-King was $9,500. As the contract provided, Zuma paid Hydro-King $4,000 in advance and promised to pay the full balance upon delivery of the boat. The contract contained no provision for liquidated damages. Prior to the agreed delivery date, Zuma notified Hydro-King that he would be financially unable to conclude the purchase; and Hydro-King thereupon resold the same boat that Zuma had ordered to a third person for $12,000 cash. If Zuma sues Hydro-King for restitution of the $4,000 advance payment, which of the following should the court decide?
Zuma's claim should be denied, because, as the party in default, he is deemed to have lost any right to restitution of a benefit conferred on Hydro-King.  Zuma's claim should be denied, because, but for his repudiation, Hydro-King would have made a profit on two boat sales instead of one.  Zuma's claim should be upheld in the amount of $4,000 minus the amount of Hydro-King's lost profit under its contract with Zuma.  Zuma's claims should be upheld in the amount of $3,500 ($4,000 minus $500 as statutory damages under the UCC)