THEORY TO PRACTICE: TractorCo manufactures tractors for consumer and industrial
ID: 458841 • Letter: T
Question
THEORY TO PRACTICE:
TractorCo manufactures tractors for consumer and industrial use. its consumer lines consist of small, lower-horsepower units used by homeowners and small businesses, and its industrial line features large, powerful tractors designed for farm and ranch use. TractorCo's least expensive tractor retails for $999, and its most expensive tractor can cost as much as $50,000. Single commercial-line tractors may be purchased for cash, meaning that the purchaser must arrange its own financing. TractoCo sells the industrial-line tractors only to commercial retailers for resale. Multiunit sales of three or more industrial-line tractors may be made on credit with payment due within 90 days of delivery.
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Business Law - The Legal Environment of Business: A Managerial Approach: Theory to Practice - Melvin and Katz, 2e, Overview and Language of Contracts THEORY TO PRACTICE TractorCo manufactures tractors for consumer and industrial use. Its consumer lines consist of small, lower-horsepower units used by homeowners and small businesses, and its industrial line features large, powerful tractors designed for farm and ranch use. TractorCo's least expensive tractor retails for $999, and its most expensive tractor can cost as much as $50,000. Single commercial-line tractors may be purchased for cash, meaning that the purchaser must arrange its own financing. TractorCo sells the industrial-line tractors only to commercial retailers for resale. Multiunit sales of three or more industrial line tractors may be made on credit with payment due within 90 days of delivery 1. When an individual sale is made to a homeowner when would the contract be considered fully exe- cuted? When a sale to a retailer involves credit when is the contract fully executed? 2. With regard to both the consumer and industrial lines, would the contracts be considered bilateral or unilateral? 3. FarmMart is negotiating a purchase of 20 top-of- the-line industrial tractors for a total price of $1 million. Would the contract be required to be formal and under seal? 4. With regard to both the consumer and industrial lines, would the contracts be considered express, implied, or quasi? MANAGER'S CHALLENGE TractorCo's sales manager is negotiating the contract installments. Should, at any time during this contract, sales Mc Graw Hill A- 162 829 PracticeExplanation / Answer
1. The contract is fully executed in individual sale at the point of delivery to the customer and when invoice is handed over to individual.
In case of retailer, the contract is fully executed at the time of payment by retailer. This can be anytime within 90 days of delivery.
2. In case of sale to individual, it is unilateral contract as individual promised to pay if performance is completed i.e delivery of the product. Howver, the seller has a clause that individual cannot re-sell the product again in the market. Then the contract become bilateral.
In case of selling the product to retailer, it is unilateral contract as purchaser has promised to pay in 90 days in return of delivery of product. The promise is from purchaser and seller has to perform for that.
3. The contract in this case will be formal and under seal. They have to sign the deed as it involves very huge amount and would be better for both parties to put their seal on the deed with the set of terms and conditions. This is enforceable even if there is no consideration. If seller fails to delivery the products, it would be considered as breach unlike the previous case where the seller was not under obligation to perform but only does that to get payment.
4. The contracts in both the cases are expressed. The individual promises to pay in cash if seller delivers the product. The retailer promises to pay in 90 days fom delivery. In both cases, purchase has to express their condition of payment and seller has to express the method of payment i.e in cash or credit
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