A Contract Is a Legal Relationship Between Parties

question 12

Multiple Choice

A contract is a legal relationship between parties. The existence or validity of the contract is measured by conditions outlined by law. An indication of the intention to create a contract is built on certain premises. These premises are:

• A) The end result will be a meeting of the parties' minds on the terms that are agreed upon.
• B) A meeting of the minds is only required when the contract deals with personal service contracts and not with commodity agreements.
• C) Each party will normally agree to do or not do certain things if there is an agreement for the other party to do or refrain from doing certain things.
• D) The process of the meeting of the minds by the parties will establish the contract itself.
• E) All of the above except B.

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Definitions:

Multiple Outputs

Multiple outputs refer to the various products or services that result from a single production process or system.

Net Realizable Value

Net realizable value is the estimated selling price of goods, minus the costs of their sale or disposal, used in inventory valuation and accounts receivable.

Split-Off Point

The stage in a production process where multiple products become individually identifiable and their costs can be separately assigned.

Additional Processing Costs

Costs incurred during the manufacturing process that are above the initial expected expenses, often due to added steps or materials required.