Contracts Keyed to Barnettback
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An automobile manufacturer entered into a contract with a well-known tire distributor which provided that the distributor would deliver to the automobile manufacturer 1,000 tires on the 15th of each month for $50,000 per shipment, with payment due upon receipt.
The automobile manufacturer and the tire distributor properly fulfilled their contractual obligations for two months. The day after the third tire delivery, the tire distributor’s president visited the automobile manufacturer and found the automobiles produced with his company’s tires to be a “disgrace.” To protect the tire distributor’s reputation, the president announced that he will not send any additional tire shipments. The automobile manufacturer immediately brought a breach of contract action against the tire distributor.
Who will prevail?CorrectIncorrect
A tomato supplier agreed to sell and a spaghetti sauce manufacturer agreed to buy all of the tomatoes that the manufacturer required over a two year period. The sales contract provided that payment was due 60 days after delivery, but that a 3% discount would be allowed if the manufacturer paid within 10 days of delivery. During the first year of the contract, the manufacturer regularly paid within the 10-day period and received the discount. However, fifteen days after the supplier made the most recent tomato delivery, the supplier had still not received payment. At this time, the supplier became aware of rumors from a credible source that the manufacturer’s financial condition was not exactly stable. The supplier wrote to the manufacturer, demanding assurances regarding the manufacturer’s financial status and ability to pay. The manufacturer immediately mailed its latest audited financial statements to the supplier, as well as a satisfactory credit report prepared by the manufacturer’s banker. Despite the credible source, the rumors proved false. Even so, the supplier refused to resume deliveries, and the manufacturer sued the supplier for breach.
Will the manufacturer prevail?CorrectIncorrect
Seller agrees to sell to buyer 100 widgets for $5 each, payment to be made May 1, and delivery to be made June 1.On April 30th, Buyer sends a check for $500 to Seller, which seller receives on May 1. On May 3rd, Seller calls buyer and says “I am out of widgets, there is no way I’ll make the delivery”.
The statement that seller would not be delivering the widgets had what kind of legal effect?CorrectIncorrect