Lava Excavators,Inc. ,needs a drill to continue its operations and orders one for $3,000 from Mining Supplies Company.Lava tells Mining that it must receive the drill by Tuesday or it will lose $10,000.Mining ships the drill late.Lava can recover
A)$13,000.
B)$10,000.
C)$3,000.
D)$0.

Question

Quizplus · Accepted Answer

Lava placed a specific time constraint that was clearly communicated to Mining Supplies Company. As Mining Supplies Company failed to deliver the drill on time, Lava has the right to recover the amount promised, which is $10,000. However, Lava still needs the drill to continue its operations, so it cannot simply return the drill and recover the full amount paid. Therefore, the best choice for Lava is to recover the promised amount of $10,000, but still keep the drill by deducting the late shipment as a penalty. Hence, the total amount recoverable for Lava would be $10,000 only.