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• B) causes the entire contract to be rescinded.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:

Earnings Per Share

A measure of a company's profitability, calculated by dividing the company's profit by the number of outstanding shares of its common stock.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Financial Data

Numerical information reflecting the financial health and operations of a company, including income statements, balance sheets, and cash flow statements.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.