Joe Drove His Car into Sam's Garage to Have Some

question 25

Essay

Joe drove his car into Sam's garage to have some repair work done. He told Sam to fix the carburetor. Sam worked on it most of the afternoon and found he had to rebuild the carburetor. He presented Joe with a bill for $250 when he returned. Joe refused to pay, saying that he had taken a law course and knew that, because they didn't agree to a specific consideration ahead of time, he was not bound in contract. Was he correct? Explain.

---

Definitions:

Bond Retirement

The process by which an issuer fulfills its obligational repayment of the principal amount of a bond before its maturity date.

Interest Expense

The cost incurred by an entity for borrowed funds, referring to the interest paid on debt.

Effective-interest Method

A method for calculating the interest expense on a bond that involves allocating the bond's interest expense over its life in a way that yields a constant rate of interest.

Book Value

Book Value is the value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus its depreciation.