Which Statement Best Describes the Value of Contracts to Society

question 53

Multiple Choice

Which statement best describes the value of contracts to society?

• A) Contracts can never be breached and therefore provide permanence to promises made between parties.
• B) Contracts permit parties to rely on terms and plan their business affairs accordingly.
• C) Contracts create equal bargaining power between negotiating parties.
• D) Contracts ensure that agreements are fair to both parties.

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Definitions:

Collateralized

The provision of an asset or property as security for the repayment of a loan, reducing the risk for the lender.

Business Loan

A loan specifically intended for business purposes, helping companies finance operations, equipment, expansion, or other business needs.

Lender

An individual, financial institution, or entity that provides funds to another with the expectation that the funds will be repaid, typically with interest.

Shareholders Wealth

The total value of an individual's or entity's ownership stake in a company, typically measured by stock price and dividends.