JD Next Practice Exam

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If a buyer refuses to complete a contract to purchase oil at $50 per barrel when the price drops to $44, how much can the seller recover?

$0
$6,000
$50,000
$44,000

The correct answer is: $6,000

In a situation where a buyer refuses to fulfill a contract to purchase oil at $50 per barrel after the market price has dropped to $44, the seller can seek to recover the difference in value due to the breach of contract. The seller had expected to sell the oil at $50 per barrel, but now, due to the buyer's refusal, they can only sell it at the lower market price of $44 per barrel. This creates a financial loss for the seller of $6 per barrel, calculated as follows: 1. Determine the price difference: $50 (contracted price) - $44 (market price) = $6 loss per barrel. Assuming the seller had a contractual obligation to sell a specific number of barrels, the total recovery would depend on the number of barrels not sold due to the breach. If we assume the seller had a contract for 1,000 barrels, the total loss from this breach would amount to: 2. Calculate total loss: $6 loss per barrel * 1,000 barrels = $6,000. This amount represents the economic harm experienced by the seller due to the buyer's failure to complete the contract. Hence, the appropriate recovery for the seller would be $6,000.