Joe Was in a Bar and Saw His Friend Sam

question 146

Multiple Choice

Joe was in a bar and saw his friend Sam. Sam had had a considerable amount to drink. Sam offered to sell Joe his Porsche automobile for only $15,000. Joe made sure to have Sam sign a written agreement to that effect. The next day, Joe went to pick up the car, but Sam didn't remember anything about it. Even when Joe showed him the written agreement signed by him, Sam refused to deliver the car. Joe sued. Which of the following correctly states the legal position of the parties?

• A) If Joe can show that there was no indication that Sam was drunk, even though Sam was completely incapacitated, he will be required to go through with the deal.
• B) Sam just has to show he was legally intoxicated, and he will not be bound.
• C) As long as Joe can produce the agreement in writing, there is nothing Sam can do to get out of the deal. Once Sam has signed the document, he is responsible for its contents.
• D) Sam will not have to go through with the deal because no money has yet changed hands.
• E) Being drunk is no excuse and the contract is binding.

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Definitions:

Fixed Production Costs

Costs that do not change with the level of production, such as rent, salaries, and insurance.

Financial Advantage

The benefit gained from making a particular financial decision or investment, often quantified by profits or savings.

Fixed Manufacturing Expenses

Costs that do not vary with production volume, such as rent, salary of permanent staff, and equipment depreciation.

Fixed Selling

Fixed selling refers to the portion of selling costs that remains unchanged regardless of the volume of goods or services sold.