A Party to a Contract Erroneously Acted on an Assumption

question 5

Multiple Choice

A party to a contract erroneously acted on an assumption involving breach of an innominate term.That party is itself now being sued for breach.What was the erroneous action taken by this party?

• A) the initiation of a claim for damages
• B) the repudiation of the contract
• C) an incorrect application of a warranty
• D) a delay of performance of obligations

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Definitions:

Capital

Capital refers to the financial resources that businesses use to fund their operations and grow, including equity, debt, and retained earnings.

Assets

Resources owned by a company that have economic value and are expected to provide future benefits.

Rent Expense

The cost incurred by a business for leasing a property or equipment for operational purposes.

Income Summary

An account used in the closing process that summarizes the results of all revenue and expense accounts.