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Thimble Company makes metal sewing thimbles for those who cannot or do not use sewing machines. Its manufacturing process creates excess bits of metal scrap (called ‘offal’) that Thimble ships monthly to scrap dealers for disposal. During October 2014, Thimble collects the offal from the factory, and on October 30 places it in storage bins in Thimble’s warehouse to await shipment. On November 6 a large rainstorm floods the warehouse and washes most all of the offal into a stream running through Thimble’s land. The stream flows into land owned by Dosch Brewery (DB), which uses water from the stream to make its premium ale. Thimble management believes the offal washed into the stream, and knows that the stream flows into DB land and that DB uses stream water to make its ale. Management does not know how DB filters its water before brewing its ale, and is therefore unsure whether the filters will keep the offal out of the ale. Thimble management chooses not to communicate with DB management at the time of the flood. On December 24, DB management contacts Thimble management and states that there is offal in its latest batch of ale. Thimble management tells DB of the flood-related events. On December 30, they negotiate a financial settlement. Which is the earliest date, if any, on which Thimble has a contingent loss? On what date is the loss non-contingent (i.e., without uncertainty as to existence)? Explain fully.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92304249

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