Laetitia Agreed to Provide Certain Services to Hans in Exchange

question 30

Multiple Choice

Laetitia agreed to provide certain services to Hans in exchange for a payment of $10 000. Although Laetitia fully performed her side of the agreement, Hans refuses to pay anything. He insists that Laetitia does not have a right to sue for breach of contract because, in performing the services, she was merely doing something that she had become obliged to do even before she entered into her agreement with Hans. Hans' position is correct if Laetitia's pre- existing obligation was

• A) some type of public duty.
• B) for some reason enforceable.
• C) a private obligation owed to a third party.
• D) supported by a seal, rather than by consideration.
• E) for some reason unenforceable.

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Definitions:

Raw Material Purchase

The process of acquiring the basic materials needed for production of goods.

Fixed Manufacturing Overhead

Fixed manufacturing overhead costs are those production expenses that do not vary with the volume of production, such as salaries of managerial staff and rent of the factory.

Budgeted Fixed Manufacturing Overhead

The predetermined amount of fixed overhead expenses expected to be incurred in the manufacturing process.

Net Operating Income

Profit of a business after all operating expenses, excluding taxes and interest, have been deducted from total revenue.