Compurite Co Specializes in the Lease of Office and Computer

question 9

Multiple Choice

Compurite Co specializes in the lease of office and computer equipment to companies. ReCompute Co sells second-hand computer equipment. In which of the following situations is Compurite not able to void the contract for unilateral mistake and reclaim its goods from ReCompute?

• A) Infovast Co, a small new business operating an internet search engine, orders 50 computers for lease from Compurite. Infovast employs a logo that starkly resembles that of Infofast Co, a large telephone search directory which Compurite supplied two years earlier and had called earlier in the month to enquire about renewing its equipment. In order to pay its debts, Infovast sells the computers to ReCompute.
• B) Walton, a fraudster, orders 50 computers under a fake company name, 'Futurfax Co'. He immediately sells the computers to ReCompute Co.
• C) Jonas comes to the sales office of Compurite and claims he is William Stockton, the new sales officer for Gower Motors Co. When filling out a lease application for 50 computers, he produces as proof of identity a forged driver's licence. A copy of this licence is faxed to a credit institution and everything checks out okay. Jonas immediately sells the computers to ReCompute.
• D) Compurite can void the contract for mistake in all three situations above and reclaim the computers from ReCompute.

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Definitions:

Utility-Maximizing Combination

A selection of goods and/or services that provides the highest level of satisfaction or utility to a consumer, given their budget constraints.

Total Utility

The total satisfaction or benefit received by consuming a particular quantity of a good or service.

Marginal-Utility Schedules

Charts or tables showing the relationship between the quantity of a good consumed and the marginal utility or satisfaction received from consuming each additional unit.

Maximum Utility

The highest level of satisfaction or benefit that a consumer can obtain from consuming goods and services, given their income and prices of goods.