Ample Country Stables contracts to buy 1,000 horseshoes from Blacksmith,Inc. ,for $1 per shoe.When the market price decreases to 50 cents per shoe,Ample refuses to go through with the deal.Blacksmith can recover
A)$1,500.
B)$1,000.
C)$500.
D)$0.

Question

Quizplus · Accepted Answer

Since Ample Country Stables refused to go through with the deal, they have breached the contract. However, Blacksmith, Inc. is entitled to recover damages for the breach. The damages in this case would be the difference between the contract price ($1 per shoe) and the market price when Ample refused to go through with the deal (50 cents per shoe), multiplied by the number of shoes (1,000). Therefore, Blacksmith, Inc. can recover $500 (0.50-1.00)*1000).

Ample Country Stables Contracts to Buy 1,000 Horseshoes from Blacksmith,Inc