Able Company contracted to sell to Baker Company 400 barrels of chemical C for $12,000. Able Company assigned the entire $12,000 in writing to Mr. Long, who sent a letter informing Baker Company of the assignment and directing Baker Company to forward money to him instead of Able Company. Unknown to both companies, at the time of the contract the ship carrying the chemical had sunk and all cargo was lost. Which of the following is true?
A) Mr. Long, the assignee, will receive $12,000 from Baker Company.
B) The assignment to Mr. Long would fail to be a statutory assignment.
C) Mr. Long will receive nothing from Baker Company because nothing is owed to Able company.
D) Mr. Long will receive part payment.
E) Since Able Company has breached the contract, it must pay compensation for the damages of both Baker Company and Mr. Long.

Question

Quizplus · Accepted Answer

Mr. Long will receive nothing from Baker Company because the underlying contract between Able Company and Baker Company cannot be fulfilled due to the loss of the chemical. Since Able Company cannot deliver the chemical, there is no obligation for Baker Company to pay, and consequently, nothing is owed to Mr. Long as the assignee.

Able Company Contracted to Sell to Baker Company 400 Barrels