Michael's Shop Has a Standard from Contract That Includes an Exemption

question 38

Multiple Choice

Michael's Shop has a standard from contract that includes an exemption clause. Michael enters into an agreement with Jill. Jill signs the agreement without reading it because she says she trusts Michael. When Michael fails to perform his part of the agreement, Jill tries to sue. The court in considering the effect of the exemption clause, will most likely

• A) require that experts provide it with a report on the effect of the clause.
• B) apply the clause.
• C) refuse to apply the court.
• D) strictly construe the clause against Michael.
• E) seek the opinion of Jill on how the clause will affect her.

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Definitions:

Inflation

The tempo at which the general cost of goods and services rises, weakening the purchasing strength.

Accruals

The accounting practice of recording revenues and expenses when they are incurred, regardless of when cash transactions happen.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term financial health and ability to cover short-term liabilities.

Dividend Yield

The ratio of a company's annual dividends per share to its current share price, indicating how much an investor gets back relative to the share price.