The Importance of Trust as a Fundamental Principle Underlying Business

question 30

Multiple Choice

The importance of trust as a fundamental principle underlying business transactions is illustrated by expectations that:

• A) investors will be able to earn a return on their investments.
• B) employees may be discharged at any time for any reason without notice.
• C) litigation is inevitable because parties to agreements usually break promises.
• D) insider trading proves that the economic system underlying business is flawed.

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Definitions:

Disaffirm

The legal act of declaring a contract voidable, renouncing or refusing to recognize an engagement.

Emancipated Minor

A person under the age of majority who is legally granted most adult rights and responsibilities by court order or other means.

Contractual Obligations

Contractual obligations are duties that are legally binding on the parties involved in a contract, requiring them to act or refrain from acting in certain ways.

In Pari Delicto

A legal doctrine meaning "in equal fault," used when both parties are equally at fault in a legal matter.