Johnny Sees His Brother-In-Law Tom One Night Outside a Club

question 26

Multiple Choice

Johnny sees his brother-in-law Tom one night outside a club.Tom is clearly drunk and barely recognises Johnny.Johnny offers to get Tom home safely if Tom will lend Johnny his motorcycle the following weekend.Johnny gets Tom home safely but the following weekend Tom refuses to give Johnny his motorcycle.Which of the following is true?

• A)There is a contract between Johnny and Tom of which Tom is now in breach.
• B)Johnny cannot enforce Tom's promise because he did not provide consideration.
• C)The contract is unlikely to be enforceable due to Tom's lack of contractual capacity.
• D)The contract is unenforceable because it was not in writing.

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Definitions:

Retained Earnings Account

An equity account that represents the accumulated portion of net income that a company has decided to retain, rather than distribute among shareholders in the form of dividends.

Stock Dividend

A payment made in the form of additional shares rather than cash, distributed to shareholders from the company's existing stock.

Cash Dividends Payable

A liability account on a company’s balance sheet representing the amount of dividends declared by the board of directors but not yet paid out to shareholders.

General Journal Entry

A basic accounting record used to log all business transactions and events in the accounting system.