A bank agreed to lend a merchant $10,000 for one year at 8% interest. The loan proceeds were to be disbursed within two weeks. The merchant intended to use the loan proceeds to purchase a specific shipment of carpets for resale at an expected profit of $5,000 but said nothing about these plans to the bank. The bank failed to disburse the proceeds and refused to assure the merchant that it would do so. The merchant was able to secure a loan from another lender at 10% interest for one year. However, by the time the merchant started the application process for a substitute loan, it was too late to pursue the opportunity to buy the shipment of carpets. In an action against the bank for breach of contract, which of the following amounts is the merchant likely to recover?
Answers:
A. Nothing, because damages lost opportunities are not recoverable.
B. Nothing, because the parties failed to tacitly agree that the merchant would be entitled to damages in the event of a breach by the bank.
C. The difference in cost over time between a loan at 10% and a loan at 8%.
D. $5,000, the merchant's foreseeable loss.
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A bank agreed to lend a merchant $10,000 for one year at 8% interest. The loan proceeds were to be d...
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