Mike and Jane Contract to Purchase and Sell $1,000,000 Worth

question 47

Essay

Mike and Jane contract to purchase and sell $1,000,000 worth of computer chips to be manufactured in Japan and shipped to San Francisco.The contract is silent about the method of delivery.Mike asserts that delivery is by ship,which is customary in the computer chip industry,but Jane insists that delivery is by air,which is what a previous contract between Mike and Jane provided.Explain how a court will resolve this dispute.

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Definitions:

Adjusting Entries

Entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Cost of Goods Sold

Expenses directly connected with making the products a company offers for sale.

FOB Destination

A shipping term indicating that the seller is responsible for the cost and risk of transport until the goods reach the buyer's location.

Buyer's Place

The agreed location where the buyer takes ownership of goods purchased, significant in determining shipping costs and liability.