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

question 4

Multiple Choice

E-mation entered into a contract with a consumer,Ezra,a recent immigrant to the United States,who 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 for enforcement the contract,what is the most likely result?

• A)The contract is enforceable because of usury statues.
• B)The contract is unenforceable because it is ancillary to a legitimate bargain.
• C)The contract is enforceable because of the exculpatory clause.
• D)The contract is unenforceable because it is unconscionable.

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Definitions:

FIFO inventory cost method

A method to assign costs to inventory that assumes the first items purchased are the first ones sold, primarily affecting the cost of goods sold and ending inventory value.

Cost of merchandise sold

The total cost incurred by a company to sell its merchandise during a specific period, including the cost of the goods themselves plus any additional costs related to their sale.

Perpetual inventory system

A method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

LIFO cost method

An inventory costing method that assumes the last items purchased or produced are the first ones sold, impacting the cost of goods sold and inventory valuation.