Mike Owns a House in a Poor Area of a Large

question 28

Multiple Choice

Mike owns a house in a poor area of a large city.Mike is on disability and his total monthly income is $700.A sales representative visits his home,selling a water purification system.Mike signs a contract that calls for monthly payments of $500 for the next 10 years.The water system is worth no more than $1000.Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water.How would a court most likely describe this contract?

• A)The contract is fully enforceable as written.
• B)The contract is unenforceable because it is unconscionable.
• C)The contract is enforceable, but only up to the value of the water system.
• D)The contract is unenforceable because it is exculpatory.

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Definitions:

Missing Amounts

In accounting and finance, refers to figures that are not reported or recorded and need to be determined through analysis or reconciliation.

Gross Profit Calculation

The process of determining a company's gross profit by subtracting the cost of goods sold from total revenue.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a reduction in sales revenue.