Laminate LLC agrees to buy factory equipment from Metalwork Company on the seller's misrepresentation that it meets certain specifications. Metalwork assigns the right to payment on the deal to Nations Credit Corporation. When the buyer discovers the fraud, the firm returns the equipment and cancels their contract. Laminate
A)must pay the entire contract price to Nations Credit.
B)need not pay any of the contract price to Nations Credit.
C)must reimburse Nations Credit for costs with respect to the assignment.
D)must pay a prorated amount of the contract price to Nations Credit.

Question

Quizplus · Accepted Answer

When a buyer cancels a contract due to the seller's misrepresentation, the buyer is not obligated to pay the contract price, even if the right to payment has been assigned to a third party like Nations Credit Corporation. The assignment of the right to payment does not alter the buyer's rights under the original contract, including the right to cancel the contract and return the equipment due to fraud.

Laminate LLC Agrees to Buy Factory Equipment from Metalwork Company