Donald Is the Owner of a Recently Closed Gas Station

question 6

Essay

Donald is the owner of a recently closed gas station. John, a neighbouring filling station owner, agreed to buy the gasoline remaining in Donald's tanks. Donald tested the gasoline for the presence of water, which would destroy the gasoline, and found it to be "clean." He then called John informing him of the test results and quoted him a price. John reaffirmed his agreement to buy and arranges pickup of the gas two days later. During the intervening 18-hour period a large amount of rain fell and with the excess amount left on the ground, water drained into the tank and ruined the gas. Upon hearing this, John refused to buy, but Donald pointed out that the gas was already John's and insisted on payment.
a. Discuss how the rules of title transfer would help effect a resolution to this situation.
b. How would the outcome differ if Donald sold the gas by the litre and if the amount of gas in the tank was unknown and had to be measured, when John came to remove it?

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Definitions:

Underselling

The practice of selling goods or services at a lower price than competitors, potentially to gain market share.

Japanese Markets

Financial and product markets in Japan, encompassing stock exchanges, commodity trading, and consumer goods markets unique to the Japanese economy.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service more efficiently than competitors using the same amount of resources.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors.