A Contingent Liability

question 149

Multiple Choice

A contingent liability:

• A)Is always of a specific amount.
• B)Is a potential obligation that depends on a future event arising out of a past transaction or event.
• C)Is an obligation not requiring future payment.
• D)Is an obligation arising from the purchase of goods or services on credit.
• E)Is an obligation arising from a future event.

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Definitions:

Enforceable

Describes a legal agreement or obligation that can be upheld and compelled by law, allowing one party to ensure compliance by another.

Illegal

Actions or activities that are forbidden by law or statute and subject to criminal or civil penalties.

Exculpatory Clause

A contract provision that releases one party from liability for wrongful acts or negligence.

False Rumour

An untrue statement or tale spread among people, often causing misunderstanding or misinformation.