In Axelson V

question 86

Multiple Choice

In Axelson v.McEvoy-Willis,McEvoy hired Axelson to build special equipment for oil rigs,after forms went back and forth,Axelson built equipment for McEvoy,which suddenly cancelled the contract.Axelson sued for damages;McEvoy noted the contract stated it could cancel at any time.The appeals court held that:

• A)McEvoy was not liable for any damages
• B)if the conduct of both parties had recognized the existence of a contract before the insertion of the term that McEvoy had the right to cancel the order at any time,McEvoy would have been liable for breach of contract,but this was not the case
• C)the contract was unfair to Axelson,so McEvoy was liable
• D)McEvoy was liable for punitive damages
• E)none of the other choices are correct

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Definitions:

Contingent Performance Obligation

An obligation in a contract that becomes enforceable only under certain conditions or upon the occurrence of specific events.

Additional Paid-In Capital

The amount of capital paid by investors for shares that exceeds the par value of the shares; also referred to as share premium.

Fair Value

An estimate of the market value of an asset or liability, reflecting current conditions and market perceptions.

Voting Stock

Shares in a company that grant the holder the right to vote on corporate matters, typically related to the election of the board of directors.