A Force Majeure Clause

question 35

Multiple Choice

A force majeure clause

• A)allows a frustrated contract to be rescinded.
• B)overrides the effect of an event that normally would constitute frustration.
• C)is important primarily because of the possibility of duress or undue influence.
• D)means that if there is a dispute regarding the effect of a contract, and there are more than two parties to the contract, the majority view will prevail.
• E)provides protection against the possibility of unconscionable conduct.

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Definitions:

Consolidated Balance Sheet

A financial statement that aggregates the assets, liabilities, and equity of a parent company and its subsidiaries into one document for a clear view of the total business.

Contingent Consideration

An obligation of an acquiring entity to transfer additional assets or equity interests if future events occur or conditions are met, following an acquisition.

Goodwill Impairment

A reduction in the book value of goodwill, which occurs when the carrying amount of goodwill exceeds its fair value, indicating that the asset is not as valuable as previously thought.

Reporting Units

Segments or components of a business for which discrete financial information is available and reviewed by the operating segment's management.