Sarah Adams runs the Adams Manufacturing Company as a sole

proprietorship. After a run of bad luck in other business ventures, Sarah finds

herself in need of immediate cash. She sells the Adams Manufacturing

Company to Ted Peters, a wealthy Texas oilman, for $$10$ million. Adams uses

the sale proceeds to pay off her other debts, after which she is barely solvent.

Peters knows nothing about the manufacturing business and desires to

maintain the goodwill that the Adams Manufacturing Company has built up

over the years. He hires Adams to continue running the business at an

appropriate salary. He does not change the name of the company and, as far

as the outside world is concerned, no one is aware that ownership of the

company has changed hands. Peters permits Adams to make most day$-$to$-$day

business decisions, but reserves to himself the right to make purchase

decisions in excess of $$10,000.$

Adams orders $$100,000$ worth of office furniture from the ABC Furniture

Company. The furniture is specifically designed to suit the needs of the Adams

Manufacturing Company. It cannot be sold to other customers. ABC believes

that it has contracted with Adams personally. The day after the furniture is

delivered, Peters finds out about the deal and immediately orders the furniture

returned. For the first time, ABC learns that Peters, rather than Adams, owns

the Adams Manufacturing Company. Can ABC successfully sue Peters on the

contract?

Answer rating: 100% (QA)

lets delve deeper into the legal aspects and potential solutions for ABC Furniture Company regarding the contract with Sarah Adams and the subsequent change in ownership to Ted Peters 1 Contracting Pa... View the full answer