Signal Sets Company contracts to deliver one hundred 55-inch 3D HD television sets to a new retail customer, Tuner TV Store, on May 1, with payment to be made on delivery. Signal tenders delivery in its own truck. Tuner's manager notices that some of the cartons have scrape marks. Tuner's owner phones Signal's office and asks whether the sets might have been damaged as they were being loaded. Signal assures Tuner that the sets are in perfect condition. Tuner tenders Signal a check, which Signal refuses, claiming that the first delivery to new customers is always for cash. Tuner promises to pay the cash within two days. Signal leaves the sets with Tuner, which stores them in its warehouse pending its "Grand Opening Sale" on May 15. Two days later, Tuner's stocker opens some of the cartons
and discovers that a number of the sets are damaged beyond ordinary repair. Signal claims Tuner has accepted the sets and is in breach by not paying on delivery. Will Signal succeed on these claims? Explain.
What will be an ideal response?
Signal will lose on both claims. Acceptance of the goods by a buyer takes place when the buyer either signifies that the goods are conforming after inspection or fails to reject after a reasonable time for inspection or acts inconsistently with the seller's ownership. Once the goods are accepted, the buyer loses the right to revoke acceptance of nonconforming goods unless acceptance was based on a reasonable assurance that the goods were conforming.
In this case, although Tuner accepted the goods, it did so on Signal's assurance that the sets were in perfect condition. Thus, on discovery of the damaged sets, Tuner can revoke acceptance on the basis of substantial impairment of value.
In addition, although the contract called for payment on delivery, no method of payment was specified. Therefore, tender of payment is sufficient if it is by any means currently used in the ordinary course of business¾a check is such a means. Signal does have a right to demand cash but must give Tuner a reasonable extension of time in which to procure the cash. Thus, Signal's claim of Tuner's breach for nonpayment on delivery is not valid.
You might also like to view...
The difference between the amortized cost basis of a debt security and the present value of expected cash flows for that security discounted at the effective interest rate implicit in the debt instrument when it was originally acquired is called the:
A. other-than-temporary impairment. B. amount related to all other factors. C. amount representing the credit loss. D. subsequent recovery in fair value.
Gizmo Multimedia Corp. is an organization that follows the process of progressive discipline. The organization communicates with Lyla, an employee, about unacceptable behavior and responds to a series of her offenses. Which step would immediately precede a threat of temporary suspension?
A. a letter informing about her demotion B. an official written warning C. a termination letter D. an unofficial spoken warning E. a letter informing Lyla about her transfer
The indirect method of preparing a statement of cash flows
A) eliminates the need for a schedule of noncash investing and financing transactions. B) provides a different result than the direct method. C) adjusts net income for changes in current accounts. D) shows collections from customers rather than the change in Accounts Receivable.
A marketer using information for a company's database of customer information such as previous inquiries, transactions, and servers is using a(n) ________
A) house file B) PURL C) ROI D) outside list E) inside sale