Farmer Tom Entered into a Contract with Jerry's Pickle Company

question 5

Multiple Choice

Farmer Tom entered into a contract with Jerry's Pickle Company wherein Tom agreed to sell Jerry 500 pounds of cucumbers suitable for processing into pickles.The terms of the sale were cash on delivery.When Jerry received the cucumbers,it was obvious to him without inspection that the cucumbers were too large for processing into pickles.Under these circumstances:

• A)Jerry may reject the cucumbers,but Jerry must notify Tom of the rejection and follow any reasonable instructions from Tom concerning disposal of the cucumbers.
• B)Tom may not reject the cucumbers because the terms of the sale were cash on delivery.
• C)Tom must accept the cucumbers and pay for them,but he may be entitled to reduction in the purchase price as damages for breach of contract.
• D)even if Tom had some reason to believe Jerry would accept the cucumbers,he cannot cure the breach by reshipping conforming cucumbers to Jerry within a reasonable time.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Sales

The total amount of goods or services sold by a company, contributing to its revenue.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not affect future business decisions.