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 Microsystems can sue Zeitar Studios to recover the lost profits because Zeitar's insolvency and the subsequent cancellation of the contract resulted in Klint having to sell the specially designed microchips at a loss.

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