[Customer Uncertainty] Luke Wanted Baseball Caps with the Name of the Firm

question 30

Multiple Choice

[Customer Uncertainty] Luke wanted baseball caps with the name of the firm of which he was president,ABC Corporation,emblazoned on the front.Emilia,a merchant in specialized goods,orally agreed with Luke that she would sell him 200 baseball caps at $5 each.No writing was ever made,although there were a number of witnesses to the conversation.After the caps were finished,but before they were shipped,Luke called to cancel the order because his firm had just announced a merger and would no longer be known as ABC Corporation.Emilia told him she would not cancel the contract because she had just finished the caps.Luke told Emilia that she should have been smarter and had him sign something because without a writing,she would not have a chance in court.Emilia is also having problems with other customers.A father who voluntarily coached a youth softball league in his community called and orally ordered 150 baseball caps at a cost of $4 to give out at a league banquet.He wanted a variety of caps with no name on them because players from different teams would be at the banquet.Emilia sent a confirmation letter to the coach and had the caps packed up and ready to go.Just before she shipped them,the coach called and told her that there was a big feud,the banquet was canceled,and that he was canceling the order.She believes that the coach should pay damages,especially because a big order was involved.Finally,Emilia has a merchant customer who orally ordered 500 plain T-shirts at a cost of $5 each,but has not picked them up and has refused to do so after several demands.Emilia wants to take the merchant customer to small claims court.
-Which of the following is correct regarding Luke's assertion that Emilia cannot recover the cost of the caps?

• A)Luke is correct.Emilia cannot recover because she has nothing in writing.
• B)Luke is incorrect because the cost of the caps is insufficient to come within the requirement of a writing under the UCC.
• C)Luke is incorrect both because Emilia had already made the caps and also because she had witnesses.
• D)Luke is incorrect because Emilia had already made the caps and she cannot sell them to another buyer.
• E)Luke is incorrect because Emilia has witnesses.

---

Definitions:

Stockholders' Equity

The portion of a company's capital that belongs to shareholders, calculated as total assets minus total liabilities.

Common Stock Option Warrants

Rights issued to investors to purchase stock at a specified price before a certain date, often used as an investment incentive.

Stock Option Plan

A compensation strategy used by companies to grant employees the option to purchase company shares at a predetermined price.