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Sigma contracted to sell 100 motors to Beta at $100 each (a…

Posted byAnonymous July 2, 2021September 20, 2023

Questions

Sigmа cоntrаcted tо sell 100 mоtors to Betа at $100 each (a total of $10,000), which Beta planned to use to produce 100 home air conditioning units. Beta reasonably expected to make a profit of $300 per air conditioning unit (a total of $30,000) when it manufactured and sold them. Sigma entirely failed to deliver, and Beta avoided the contract without having made any payment to Sigma. There are no other suitable motors available, and Beta cannot reasonably manufacture the air conditioners without the Sigma motors. Because Beta is unable to manufacture the motors, it also incurs charges of $5,000 (restocking fees) to return all other unused components it had already purchased for use in manufacturing the air conditioning units. Sigma was fully aware of Beta’s intended use of the motors and the likely unavailability of substitute motors. How much is Beta entitled to recover in damages?

Sigmа cоntrаcted tо sell 100 mоtors to Betа at $100 each (a total of $10,000), which Beta planned to use to produce 100 home air conditioning units. Beta reasonably expected to make a profit of $300 per air conditioning unit (a total of $30,000) when it manufactured and sold them. Sigma entirely failed to deliver, and Beta avoided the contract without having made any payment to Sigma. There are no other suitable motors available, and Beta cannot reasonably manufacture the air conditioners without the Sigma motors. Because Beta is unable to manufacture the motors, it also incurs charges of $5,000 (restocking fees) to return all other unused components it had already purchased for use in manufacturing the air conditioning units. Sigma was fully aware of Beta’s intended use of the motors and the likely unavailability of substitute motors. How much is Beta entitled to recover in damages?

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Tags: Accounting, Basic, qmb,

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