The Weyburn Farmers' Co-Op Contracted to Sell a Carload of Grain

question 124

Multiple Choice

The Weyburn Farmers' Co-op contracted to sell a carload of grain to Mr. Takemori for $2,000. The co-op assigned, in writing, its contractual right to receive the $2,000 to the Royal Bank, to which it was indebted. The Royal Bank gave written notice of the assignment to Takemori. Unknown to the buyer and the seller, at the time of the contract the grain had been destroyed because of a train derailment caused by the negligence of the train conductor. On these facts, which of the following is true?

• A) The Royal Bank will receive part payment from Takemori.
• B) The Royal Bank will receive $2,000 from Takemori because there was an assignment in writing and that is the sole test for determining if the assignee will be paid the amount of the assignment.
• C) The Royal Bank, the assignee, will receive the $2,000 because it could prove privity of contract with Takemori.
• D) Because of the conductor's negligence, the railroad will have to honour Mr. Takemori's contract with the Royal Bank.
• E) The Royal Bank will receive nothing from Takemori, because Takemori owes nothing to the Co-op.

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Definitions:

Total Product

The overall quantity of output that a firm produces, usually within a given period, considering all factors of production.

Complementary Resources

Assets or inputs that enhance the value or effectiveness when used in conjunction with another resource.

Least-costly Combination

In production, using the mix of resources that minimizes cost while producing a given level of output.

Marginal Resource Cost

Marginal resource cost is the additional cost incurred by producing one more unit of a good or service.