Which of the Following Statements Best Explains Why the Courts

question 39

Multiple Choice

Which of the following statements best explains why the courts use an objective test to determine whether or not there is an intention to create legal relations?

• A)It would not be fair to recognize a contract unless both parties actually intended to be bound by that contract.
• B)The law of contracts is intended to protect reasonable expectations.
• C)The reasonable person test is only useful for determining subjective intentions.
• D)The courts are confident that people do not lie in court.
• E)An objective test is used if a party is a company, while a subjective test is used if a party is a human being.

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Definitions:

Income Measurement

The process of determining the monetary amount of the income earned by a business during a specific period.

Constructive Receipt

A tax principle stating that income is considered received by the taxpayer once it is credited to their account or made available without restriction.

Taxable Income

The portion of income used to calculate how much the entity owes in taxes to the government, after all deductions and exemptions are applied.

Ability To Pay

The financial capacity of an individual or entity to meet financial obligations or commitments without incurring undue hardship.