[Refused Furniture] Maya Arranged to Sell Furniture from Her Furniture

question 51

Multiple Choice

[Refused Furniture] Maya arranged to sell furniture from her furniture store to Luke for $3,000. Luke was required to give Maya a $500 deposit on February 1 and pay the remainder in monthly installments. Maya was to deliver the furniture by February 7. Luke did not pay Maya the deposit as promised on February 1. He asked her to wait until March 1, but she refused. She told him that the contract was canceled, and she refused to deliver the furniture at all. Due to a downturn in the economy, Maya was able to sell the furniture for only $2,500. Luke told Maya that she had no right to withhold or sell his furniture to another buyer, and that he was going to file suit. Maya also incurred $100 in additional advertising costs to advertise the furniture that Luke initially purchased. Maya saved $40 in delivery costs because she did not have to deliver the furniture to Luke and the subsequent purchaser picked up her own furniture.
-Which of the following statements is true regarding any deduction in damages to which Luke is entitled?

• A) Luke is not entitled to any deduction because he was the breaching party.
• B) Luke is entitled to a deduction for the delivery expenses only if he can show that Maya agreed in writing to deduct those expenses in the event of a breach.
• C) Luke is entitled to a deduction for the delivery expenses only if he can establish that Maya either knew or should have known that he would be unable to pay for the furniture.
• D) Luke is entitled to a deduction for the delivery expenses because that was a savings to Maya.
• E) Luke is entitled to a deduction for the delivery expenses because Maya breached the contract by not delivering the furniture to him and then pursuing an action for damages.

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Definitions:

Commodity Products

Products that are largely interchangeable with others of the same type because they have no significant differentiation.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace, determined by supply and demand dynamics.

Oligopolistic Market

A market structure characterized by a small number of large firms dominating the industry, with significant barriers to entry for new competitors.

Price Wars

A competitive situation in which retailers and manufacturers continuously reduce prices to outdo each other, often resulting in minimal profits.