Brianna Contractually Agreed to Sell a Widget to Oren

question 57

Multiple Choice

Brianna contractually agreed to sell a widget to Oren.She was required to deliver the item on June 1 and he was required to pay $75 000 on the same day.Paragraph 21 of the contract said that if Brianna breached the contract by refusing to deliver the item,Oren would be entitled to a payment of $20 000.Brianna did,in fact,refuse to deliver the widget.Oren therefore has not yet paid the price.Which of the following statements is TRUE?

• A)If Oren suffered a loss of $15 000 as a result of Brianna's breach,he will be entitled to payment of that amount if paragraph 21 of the contract was a penalty.
• B)If Oren suffered a loss of $10 000 as a result of Brianna's breach,he will be entitled to payment of $20 000 if paragraph 21 of the contract was a penalty.
• C)If Oren suffered a loss of $30 000 as a result of Brianna's breach,he will be entitled to payment of that amount if paragraph 21 of the contract was for liquidated damages.
• D)If Oren suffered a loss of $10 000 as a result of Brianna's breach,he will be entitled to payment of that amount and no more if paragraph 21 of the contract was for liquidated damages.
• E)If Oren suffered a loss of $20 000,and the court classified paragraph 21 as liquidated damages,then Brianna would be liable to pay $95 000.

Understand the concept of secondary liability in negotiable instruments.

Analyze court holdings related to negotiable instruments and bank transactions.

Recognize the legal responsibilities and liabilities of authorized agents, accommodation parties, and indorsers in the context of negotiable instruments.

Identify the steps an individual must take to avoid personal liability when acting as an agent.

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Definitions:

Average Price

The mean price of a product or stock over a specific period, calculated by dividing the total cost by the number of units.

Direct Materials Price Variance

The difference between the actual cost and standard cost of materials used in production, highlighting efficiency in procurement.

Expected Total Sales

The forecasted amount of sales a business anticipates to achieve in a specific period, calculated based on market research and historical sales data.

Average Price

The mean cost of goods or services calculated over a specific period or set of units, used to determine general price levels.