You and I Have Entered into a Contract for the Sale

question 17

Multiple Choice

You and I have entered into a contract for the sale of a boat. We have agreed that I will deliver possession of the vessel to you at the same time that you pay the purchase price of $10 000. You have the option of paying with either cash or a certified cheque. Which of the following statements is TRUE?

• A) I would prefer to receive cash because a certified cheque would not give me any rights against the drawee bank.
• B) I would prefer to receive a cheque because it is more difficult for me to transfer cash to a stranger.
• C) You would prefer to pay with cash because cash is less risky than a cheque if a theft occurs.
• D) Certification of a cheque would be relevant only if I intended to negotiate the cheque to someone other than a bank.
• E) You would prefer to pay with a cheque because $10 000 in cash does not easily fit into your pocket.

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Definitions:

Fiduciary Duty

An obligation to act in the best interest of another party, typically in financial or trust relations.

Winding-Up Process

The formal process of dissolving a company, involving the liquidation of assets, paying off creditors, and distributing any remaining assets to shareholders.

Partnership Assets

Assets or property owned by a partnership entity, which are used for conducting its business activities.

Limited Liability

A legal principle that protects shareholders from being personally responsible for more than their investment in a corporation.