Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios to manufacture specially designed microchips to be used in an audio engineering process.Zeitar was to pay Klint $300, 000 as per the contract.Klint decided to redesign their existing microchips and make them suitable for Zeitar.While the finished microchips were being shipped via a carrier, Klint was informed of Zeitar's insolvency.Klint cancelled the shipment before it was delivered.Klint then resold the chips to another Studio where they had to settle for $150, 000, as the chips were now only suitable for specific audio engineering processes.
-What legal action can Klint take against Zeitar?
A)sue and recover lost profits
B)sue to recover purchase price
C)get a court order asking for specific performance
D)exercise the buyer's right to cover

Question

Quizplus · Accepted Answer

Klint can sue Zeitar to recover lost profits since they incurred losses as a result of Zeitar's insolvency. The contract between Klint and Zeitar was for a specific purpose and Klint invested resources into redesigning the chips to suit that purpose. Therefore, Klint is entitled to recover the value of the contract and the lost profits resulting from Zeitar's breach.

Klint Microsystems, a Microprocessor Manufacturer, Was Contracted by Zeitar Studios