Cowtown Creamery,Inc.,needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Company.Cowtown tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000.Dairy Supplies ships the part late.Cowtown can recover
A)$13,000.
B)$10,000.
C)$3,000.
D)$0.

Question

Quizplus · Accepted Answer

Since Dairy Supplies was aware that Cowtown would lose $10,000 if the part did not arrive by Tuesday and still shipped it late, Dairy Supplies is liable for the full amount that Cowtown lost. Therefore, Cowtown can recover $10,000. They have only ordered the part for $3,000 and not lost that amount, which eliminates options A and C. Option D is also incorrect since Cowtown can recover $10,000.