Banquets & Parties (B&P) contracts to buy 1,000 uninflated balloons from Gas Bags, Inc., for $1 per item. When the market price decreases to 50 cents per balloon, B&P refuses to go through with the deal. Gas Bags can recover
A) $1,500.
B) $1,000.
C) $500.
D) $0.

Question

Banquets & Parties (B&P) contracts to buy 1,000 uninflated balloons from Gas Bags, Inc., for $1 per item. When the market price decreases to 50 cents per balloon, B&P refuses to go through with the deal. Gas Bags can recover
A) ​$1,500.
B) ​$1,000.
C) ​$500.
D) ​$0.

Quizplus · Accepted Answer

Gas Bags can recover the difference between the contract price and the market price at the time of the breach, which is 50 cents per balloon. Therefore, Gas Bags can recover $500 (500 cents x 1,000 balloons) from B&P for their breach of contract.

Banquets & Parties (B&P) Contracts to Buy 1,000 Uninflated Balloons