Derek and Abyan Were Discussing Business Over Lunch When They

question 35

Multiple Choice

Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land.Since neither of them had any paper with them,Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 Forrest Street,St.Joseph,Minnesota,U.S.A.for the price of $3500 per acre.Transfer of title,payment,and possession to take place on May 1,2010." Abyan signed the napkin.On May 1,2010,Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price.If Derek sues Abyan for the price of the land,the most likely result will be:

• A) Abyan will win because the writing is not sufficient under the statute of frauds.
• B) Derek will win because the writing is sufficient under the statute of frauds.
• C) Abyan will win because Derek did not sign the writing.
• D) Derek will win because the statute of frauds does not apply to this situation.

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Definitions:

Initial Cost

The total of all expenses incurred to acquire an asset or investment, including purchase price and all related fees.

Average Accounting Rate of Return

A financial ratio that measures the expected return on an investment based on its net income and initial cost.

Straight-Line Depreciation

An arrangement for allocating the cost of a tangible asset over its duration of usefulness in identical annual segments.

Discount Rate

The interest rate charged to commercial banks and other depository institutions by the central bank for loans received from the central bank's discount window; it is also used in discounted cash flow analysis to determine the present value of future cash flows.