Larry Larcenous Sells Used Autos at Larry Larcenous' Auto Land

question 13

Multiple Choice

Larry Larcenous sells used autos at Larry Larcenous' Auto Land. On April 1, Larry sells a used Lexus SC 430 hardtop convertible, with a 4.3-liter, 300-horsepower V8 with all-aluminum construction to Gerald Gullible. The sales price was only $45,000, a steal for such a fine automobile! Like all deals too good to be true, it turns out that this deal was also. The police stop Gary less than a week later because the car's original owner reported it stolen. The title Larry received when he originally bought the car is a fake. Obviously, Gary is upset and wants to get his money back. Larry counters that Gary cannot have his money back because Larry didn't know about that the car was stolen and he exercised due care in buying the car. Who wins?

• A) Gary, because Larry violated UCC § 2-312, warranty of title.
• B) Larry, because he exercised due care in purchasing the car the first time.
• C) Gary, but only if he can show that Larry is a merchant as defined by UCC § 2-104.
• D) Larry, because the UCC does not apply once a sale is final.

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Definitions:

Peak Efficiency

The maximum point where resources are utilized in the most efficient way possible without wastage.

Maximizing Profits

The process of adjusting production or operations to achieve the highest possible profitability from the business activities.

Perfectly Competitive Firms

Companies operating in a market where no individual firm has the power to influence market prices or product quality, ensuring no barriers to entry or exit.

Demand Curves

Graphs showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.