Klint Microsystems, a Microprocessor Manufacturer, Was Contracted by Zeitar Studios

question 10

Multiple Choice

Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process. Zeitar was to pay Klint $300,000 as per the contract. Klint decided to redesign their existing microchips and make them suitable for Zeitar. While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency. Klint cancelled the shipment before it was delivered. Klint then resold the chips to another studio where they had to settle for $150,000 as the chips were now only suitable for specific audio engineering processes. What legal action can Klint take against Zeitar?

• A) sue and recover lost profits
• B) sue to recover purchase price
• C) get a court order asking for specific performance
• D) exercise the buyer's right to cover

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Definitions:

Cash Proceeds

The total cash received from transactions, such as the sale of an asset or the issuance of shares.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows or the rate charged by central banks to banks for loans.

Medicare Tax Rate

The Medicare Tax Rate is a federal payroll tax rate used to fund the Medicare program, charged to both employees and employers.

Social Security Tax

A payroll tax that finances the United States' social security program, providing benefits for retirees, the disabled, and children of deceased workers.