Obligations That May Arise from Past Transactions Only If Certain

question 48

True/False

Obligations that may arise from past transactions only if certain events occur in the future are contingent liabilities.

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Definitions:

Warranty Liability

The legal obligation of a seller to provide compensation for defects or failures in goods or services that are covered under a warranty.

Indorsement

A signature or annotation on a financial document, such as a check, that specifies the terms of transferring the document’s rights to another party.

Subsequent Holder

An individual or entity that acquires a negotiable instrument, like a check or promissory note, after it has been issued or transferred.

Transfer Warranties

Legal assurances given by a seller to a buyer regarding the title, quality, and condition of goods or property being sold.