Marcella Pays $12,000 Down on a Houseboat Which Hugh Had

Marcella pays $12,000 down on a houseboat which Hugh had agreed to sell to her for $64,000.Marcella then repudiates the contract.Hugh sells the houseboat to Lloyd in good faith for $60,000.Marcella may recover from Hugh:

A) nothing, since she was the one who repudiated the contract.
B) her $12,000 down payment since Hugh's contract with Lloyd created a novation and discharged any duty Marcella had to pay anything toward the houseboat.
C) $8,000 in restitution, which represents Marcella's $12,000 down payment less the $4,000 in damages Hugh sustained because of Marcella's breach.
D) nothing based on the principle illustrated in Arrowhead School District No.75, Park County, Montana v.James A.Klyap, Jr.

Correct Answer:

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