An Illegal Provision in a Contract

question 23

Multiple Choice

An illegal provision in a contract:

• A) causes the entire contract to be voidable.
• B) causes the entire contract to be rescinded.
• C) can be ignored by the parties in their performance of the remaining provisions of the contract,assuming that the remaining portions of the contract can stand on their own.
• D) can be ignored by the parties,because an illegal provision in a contract is not deemed substantial.

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Definitions:

Activity

A measure of actions or operations within a process, often used to allocate costs in activity-based costing.

Per Unit

A term referring to the cost, price, or quantity related to one unit of a product or service.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Variable Production Expense

Costs that vary directly with the level of production, including raw materials and direct labor costs.