Charlie Is a Contractor Contacted by Hilda to Discuss Repairing

question 65

Multiple Choice

Charlie is a contractor contacted by Hilda to discuss repairing termite damage to Hilda's home.The damage is so extensive that Charlie doubts the home can be saved.Hilda begs Charlie to try to repair the home.Charlie tells Hilda that he will do the best he can but cannot promise that the he will be successful.He will charge Hilda $60 per hour whether or not he succeeds.Hilda agrees to these terms.Which of the following is true in this situation?

• A) This is a best efforts contract properly supported by consideration on both sides.
• B) This is an illusory promise because Charlie is not obligated to repair the damage.
• C) The doctrine of promissory estoppel will allow Hilda to recover from Charlie if he fails to repair the damage.
• D) If Charlie encounters unforeseen difficulties Hilda will not be obligated to pay him.
• E) This is a requirements contract because it states what each party is required to do.

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Definitions:

Total Profit

The financial gain made in a transaction or over a period of time, which equals total revenues minus total costs.

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenues, representing the additional value created beyond all resource costs.

Accounting Profits

The total revenue of a company minus the explicit costs and depreciation expenses.

Total Costs

Total costs represent the complete sum of all expenses incurred by a business in the production of goods or services, including both fixed and variable costs.