Jones Entered into a Contract to Purchase a 1957 Edsel

question 100

Multiple Choice

Jones entered into a contract to purchase a 1957 Edsel automobile from Smith for $2,000. Unknown to Smith, Jones had an opportunity to resell that car for $5,000 to Brown, who wanted to use it as a prop in a movie being shot in town. Before the car was delivered and payment made, it was destroyed by fire, when one of Smith's employees carelessly spilled a can of gasoline in the garage where the car was kept. If the court found that the normal market value for such a vehicle was only $3,000, which of the following statements is correct with respect to the appropriate remedy that should be awarded by the court for such a breach of contract?

• A) In these circumstances, there should be no remedy since the contract has been frustrated.
• B) Because of the uniqueness of the vehicle, the court should award specific performance.
• C) The court should award only $1,000, the difference between the market price and the purchase price.
• D) The court could award $3,000.
• E) In these circumstances, the court should award $5,000, representing the lost profits.

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Definitions:

Positive Correlation

A relationship between two variables where an increase in one variable is associated with an increase in the other variable.

Increases

A rise in magnitude, quantity, or value of something.

Negative Correlation

A bond between two variables in which the elevation of one corresponds with the reduction of the other.

Increases

A term indicating a rise or growth in quantity, size, number, or extent.