Question

On September 10, Bell Corp. entered into a contract to purchase 50 lamps from Glow Manufacturing. Bell prepaid 40% of the purchase price. Glow became insolvent on September 19 before segregating, in its inventory, the lamps to be delivered to Bell. Bell will not be able to recover the lamps because

A. Bell did not pay the full price at the time of purchase.
B. The lamps were not identified to the contract.
C. Glow became insolvent fewer than 10 days after receipt of Bell's prepayment.
D. Bell is regarded as a merchant.

Answer 1

Bell Corp. cannot recover the lamps after Glow Manufacturing's insolvency because the goods were not identified to the contract. Noel's encounter with the billing error illustrates the critical role of vigilance and communication in financial transactions to prevent overpayment. The correct answer is option B. The lamps were not identified to the contract.

Step-by-step explanation:

Bell Corp. will not be able to recover the lamps from Glow Manufacturing, which became insolvent, because the lamps were not identified to the contract. This is a key concept in the sale of goods, where identification of the goods to the contract is a necessary precondition for the buyer to acquire property in the goods.

As Bell only made a partial payment and the specific goods had not been segregated or otherwise identified as the ones being sold to Bell, they retain no claim over them despite the insolvency of the seller. In a similar real-life situation that requires vigilance, Noel noticed a serious error in an equipment bill, leading to potential overpayment to a supplier.

Noel's proactive approach in communicating the issue through various channels, such as Slack, email, and considering an in-person visit, ensured that the problem was recognized and the payment was put on hold until the error was rectified, showing the importance of vigilance and prompt communication in financial matters.