Carlos Wants to Purchase a Lot, Owned by Sarah, That

question 6

Multiple Choice

Carlos wants to purchase a lot, owned by Sarah, that is next door to Sarah's home. Carlos knows Sarah will not sell the lot to him because of his barking dogs that she dislikes. Carlos agrees with Jasmine that Jasmine will purchase the lot from Sarah for him. Jasmine and Sarah reach an agreement and enter into a contract whereby Sarah is to sell the lot to Jasmine for a price within the scope of Jasmine's authority. Jasmine tells Sarah nothing about her plan to later transfer the lot to Carlos. Before title to the lot is transferred to Jasmine, Carlos tells Jasmine that he no longer wants the lot. Jasmine tells Sarah about Carlos. Sarah tells Jasmine that as far as she is concerned, Jasmine has bought the lot. Sarah says that she plans to move anyway and really does not care whether Jasmine or Carlos ends up with the lot. She just wants her money and is unconcerned about barking dogs, which will be the next owner's problem. Which of the following is true regarding whether Jasmine is personally bound on the contract with Sarah?

• A) Jasmine is not personally bound because she was acting on behalf of Carlos.
• B) Jasmine is personally bound unless she can establish that Sarah would not have sold her the lot if she had known that Carlos was involved; and the contract is, therefore, void.
• C) Jasmine is personally bound unless she can establish that Carlos has the funds with which to pay Sarah.
• D) Jasmine is not personally bound unless Carlos has legally filed for bankruptcy.
• E) Jasmine is personally bound.

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Definitions:

Economic Profit

The financial discrepancy that arises from subtracting a business's comprehensive expenditures, including direct and indirect costs, from its total income.

Short Run

A time period in economics during which at least one input is fixed and cannot be changed by the firm.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good varies with the level of production.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the variable cost per unit of output.