E-Mation Entered into a Contract with a Consumer,Ezra

question 11

Multiple Choice

E-mation entered into a contract with a consumer,Ezra.Ezra was a recent immigrant to the United States,spoke very little English,and had no formal education.The contract provided for Ezra to pay $2500 for a computer system.The system was worth $400.If E-mation sued Ezra under the contract,what is the most likely result?

• A) The contract is enforceable because of the statute of frauds.
• B) The contract is enforceable because of the parol evidence rule.
• C) The contract is enforceable because of the underlying reference rule.
• D) The contract is unenforceable because it is unconscionable.

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Definitions:

Present Values

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Operating Income

Earnings from a company's core business operations, excluding non-operating income and expenses, taxes, and interest.

Net Cash Inflows

The total amount of cash that a company receives during a given period, minus the total amount of cash outflows.

Payback Period

The length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.