Question

Your company produces mass spectrometers for sale to colleges and universities throughout the United States. On February 12, the University of Washtaw contacts your company to purchase 12 mass spectrometers at $1,000,000 per unit. You enter into a contract with the university on March 1 under those terms, along with a delivery date of December 1. On April 10, you receive a letter from the university stating that, due to ambiguities in the contract language, they believe you are only owed $10,000,000. Specifically, Washtaw states, "please find enclosed a check for $10,000,000 for payment in full, check marked as such. Also, this is the total amount of our budget. We would be more agreeable to cancelling the contract than to have to come up with another $2,000,000." Your company has not yet started production on the spectrometers. What are your options and why?

Answer 1

If my company gets a order from University of Washtaw of 12 spectrometers that needs to be supplied in December. You have 10 months to manufacture those products and yes there are chances that no company would start the manufacturing before such a long time and we followed the same process. First thing to note over here is that once we sign a contract we take the token amount from the University which gives the order so that they do not make any changes while paying the bill. They have not given any kind of advance money it means that the deal is not closed fully then there is no point starting the manufacturing process for them. If there is case that my company have very old relationship with University which could be this case, so we will accept the order without token money. Now if University is insisting me that the order is worth $10000000 instead of $12000000. If company's present condition is good and we are having handsome profit, i could have cancelled the order because those persons who are showing tantrums before given the money, they will annoy in the long run. If the present condition is not good, i will insist the University person to raise the amount, if they do not increase, i will accept the order and deliver the product on time.