A Force Majeure Clause

question 73

Multiple Choice

A force majeure clause:

• A)Prohibits assignment of contract rights.
• B)Creates a third-party beneficiary.
• C)Excuses performance in the event of a natural disaster.
• D)Requires that the performance meet the personal satisfaction of the promisee.
• E)Operates as a delegation of duties.

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Definitions:

Customized Products

Goods that are tailored or adapted to meet specific customer demands or requirements, differing from standard off-the-shelf items.

Direct Labor

Direct labor refers to the wages paid to employees who are directly involved in the production of goods or the provision of services.

Overhead

All indirect costs related to the production of goods or services, including utilities, rent, and salaries for support staff, not directly traceable to a product.

Conversion Cost

The combination of labor costs and overhead expenses associated with transforming raw materials into finished goods.