Therefore, ILC argued, Rose-A-Linda effectively rejected the turkey-hatching unit, relieving ILC of its contractual obligations. Who is correct? Explain.

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Therefore, ILC argued, Rose-A-Linda effectively rejected the turkey-hatching unit, relieving ILC of its contractual obligations. Who is correct? Explain.

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Can-Key Industries, Inc., manufactured a turkey-hatching unit, which it sold to Industrial Leasing Corporation (ILC), which leased it to Rose-A-Linda Turkey Farms. ILC
conditioned its obligation to pay on Rose-A-Linda’s acceptance of the equipment. Rose-A-Linda twice notified Can-Key that the equipment was unacceptable and asked that it be removed. Over a period of fifteen months, Can-Key made several unsuccessful attempts to solve the problems with the equipment. During this time, Can-Key did not instruct Rose-A-Linda to refrain from using the equipment. Rose-A-Linda indicated its dissatisfaction with the equipment, and ILC refused to perform its obligations under the contract. Can-Key then brought suit against ILC for breach of contract. It argued that Rose-A-Linda accepted the equipment, as it used it for fifteen months. ILC countered that the equipment was unacceptable and asked that it be removed. It claimed that Can-Key refused and failed to instruct Rose-A-Linda to refrain from using the equipment. Therefore, ILC argued, Rose-A-Linda effectively rejected the turkey-hatching unit, relieving ILC of its contractual obligations. Who is correct? Explain.

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Verified Answer

The contract judgment might be in favor of Corporation I as the acceptance of Corporation I is based upon the acceptance of the lessee.
Farm R is only obligated for the accepted unit.
There has been a direct rejection by Farm R by notifying Industries R about the rejection. As a result, Farm R did not accept Country T's hatching unit; consequently, Corporation I is not obligated to pay for it.

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