Fred's Fireplaces Enters into a Contract with Miguel's Patio Supply

question 8

Multiple Choice

Fred's Fireplaces enters into a contract with Miguel's Patio Supply in which Miguel's agrees to purchase 20 fireplaces. Miguel fails to pay and Fred's Fireplaces sells the fireplaces to Phillips Outdoor Store instead. However, Phillips Outdoor Store pays $500 less than Miguel had agreed to pay. What rights does Fred have?

• A) None because he chose to sell the goods.
• B) None because he did not notify Miguel before selling the fireplaces to someone else.
• C) None because Miguel did not agree to allow him to sell the fireplaces to Phillip.
• D) He can sue Miguel for the entire amount Miguel was supposed to pay for the fireplaces.
• E) He can sue Miguel for $500, the difference between the resale price and the contract price.

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Definitions:

Operating Cycle

The average period of time it takes for a company to purchase inventory, sell products, and collect cash from customers.

Total Asset Turnover

A financial ratio that measures a company's ability to use its assets to generate sales, calculated by dividing sales or revenue by the total assets.

Year 2

The second year in a given time frame, often referring to the second year of a company's operation or the second year in a dataset.

Debt-to-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.