Gary Neugent leased a gas station and purchased gas from Amoco Oil Co. Walter an
ID: 461972 • Letter: G
Question
Gary Neugent leased a gas station and purchased gas from Amoco Oil Co. Walter and Vernice Beroth met with Neugent to discuss buying gasoline from them instead of directly from Amoco. One of the Beroths mentioned a price of “6 cents over Beroth’s cost.” Neugent thought “cost” meant the “rack price” or the price at which the Beroths bought the fuel, and the Beroths meant rack price plus tax and freight. Three months later, the Beroths took over Amoco’s lease, and Neugent started getting gas from them. He later discovered that they had been charging him rack price plus freight plus 6 cents a gallon and sued for breach of an oral contract. Did he have a contract with the Beroths at rack price?
Subject: MKTG1130-Business Regs and Compliance
100 words or more
Please make sense
Explanation / Answer
Both parties agree to the fact that in their meeting price mechanism was discussed, but they differ on the interpretation of the price. While Beroth’s mentioned a price of 6 cents over Beroth’s cost, Neugent assumed cost meant rack price, or the price at which Beroth’s bought the fuel and Beroth’s meant rack price plus tax and freight. Though there’s a difference of opinion on the concept of cost, however, there’s clarity that cost was mentioned in the discussion and the no the rack price. Cost generally means the landed cost including freight. Therefore, given the ambiguity over interpretation of cost, it cannot be concluded that Neugent had a contract with the Beroth’s at rack price.
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