In an International Contract, a Force Majeure Clause

question 111

Multiple Choice

In an international contract, a force majeure clause:

• A) specifies the contingencies in the event of a specified occurrence contemplated by the parties during the negotiation of the contract
• B) protects contracting parties from problems arising from problems beyond their control
• C) is triggered solely by economic rather than social and political activities and events
• D) an integral part of the arbitration provision when third world governments are involved in the contract
• E) is not a part of international contracts for the sale of services

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Definitions:

Variable Costs

Costs that change as output levels change.

Marginal Costs

The additional cost incurred in the production of one more unit of a good or service.

Fixed Costs

Costs that do not change with the amount of goods or services produced, such as rent, salaries, or insurance.

Accounting Profit

Profits as shown on a company’s financial statements. Accounting profit does not necessarily correspond to real or economic profit.