Dean Builders agrees to purchase all of its sump pump requirements for the new houses it builds from Satisfactory Sump Pump, Inc These two business have had similar agreements the last three years and Dean's requirements have averaged 100 sump pumps per year. This year there was an unusually wet spring and Dean's requirements doubled to 200 sump pumps. Because of the high demand for sump pumps,
the market price of the pumps tripled. Satisfactory Sump Pump, Inc delivers 100 pumps at $75, the contract price. Satisfactory has exhausted its inventory and cannot deliver any more, so Dean buys the other 100 pumps from other suppliers at $225 each. Dean sues Satisfactory Sump Pump, Inc for the additional expense. What is the most likely result?
a. Satisfactory Sump Pump, Inc. wins; output and requirements contracts are not enforceable since no quantity is stated.
b. Dean wins; Satisfactory Sump Pump, Inc. agreed to meet the needs of Dean and did not do so, which is a breach.
c. Satisfactory Sump Pump, Inc. wins; requirements contracts are governed by a good faith standard, and it was unreasonable for Dean to demand so many additional pumps.
d. Dean wins; the requirement of good faith applies only between merchants, and Dean is not a merchant.
c
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A _____ is an instrument issued by a bank, post office, or express company indicating that the payee may request and receive the amount indicated on the instrument.
Fill in the blank(s) with the appropriate word(s).
If you have total annual cost (TAC), total annual setup cost (TASC), total annual holding cost (TAHC), and total annual materials purchase cost (TAMPC), then you can calculate total annual stock-out cost (TASOC) by the following formula:
A. TASOC = TAC – TASC – TAHC – TAMPC B. TASOC = TAC + TASC – TAHC – TAMPC C. TASOC = TAC + TASC + TAHC – TAMPC D. TASOC = TAC + TASC – TAHC + TAMPC