A Homebuilder, Jim, Accepts an Entire Contract from Mark to Build

question 45

Multiple Choice

A homebuilder, Jim, accepts an entire contract from Mark to build a house for $500 000 on his property.Half way through the job, the builder's material and money run out and Jim is unable to finish the job.He chooses to leave the worksite indefinitely.A year later, Jim returns to find the house on Mark's property fully completed.Jim then asks Mark to pay for the work that he completed before leaving the worksite.Mark refuses to pay.Which of the following is true?

• A)Mark has to pay Jim $250 000 for the substantial performance.
• B)Mark can use his discretion to decide how much to pay Jim, but the amount must be under $500 000.
• C)Mark owes Jim $0 for the work he did on the house, but he may owe Jim for using his building materials.
• D)Mark has to pay Jim $500 000 for the substantial performance.
• E)Mark owes Jim $0 because $500 000 would be considered an unreasonable price.

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Definitions:

Cash Flow from Operating Activities

A measure of the cash generated by a company's normal business operations.

Cash Paid

Money that a company spends during a period for operating activities, investments, and financing activities, excluding non-cash transactions.

Dividends to Stockholders

Payments made to shareholders out of a corporation's profits as a reward for investing in its shares.