A Contract Contains a Provision That States It Will Be

question 10

Multiple Choice

A contract contains a provision that states it will be effective for a "year." The plaintiff in a lawsuit claims that a "year" is obviously 12 months.The defendant claims that the contract meant a 10-month school year.Parol evidence:

• A) cannot be used to explain the term,because the plain meaning of a "year" is 12 months.
• B) cannot be used to explain the term,because it is an integrated document.
• C) can be used to clarify the parties' intent because in this contract the term "year" is ambiguous.
• D) cannot be used,because the contract contains an express term that could have been changed by the parties prior to the contract's execution.

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Definitions:

Financial Statement

Documents that provide an overview of a company's financial condition in both short and long term, including balance sheets, income statements, and statements of cash flows.

Permanent/Temporary

In accounting, refers to the classification of accounts based on their longevity; permanent accounts are cumulative over time (e.g., assets, liabilities, equity), while temporary accounts are closed at the end of each accounting period (e.g., revenues, expenses).

Normal Balance

The side (debit or credit) on which increases to the account are recorded, based on the type of account (asset, liability, equity, revenue, expense).

Financial Statement

A written report that quantitatively describes the financial health of a company, including balance sheets, income statements, and cash flow statements.