Nick, a Builder, Contracts with the City of Chicago to Build

question 45

Multiple Choice

Nick, a builder, contracts with the city of Chicago to build a new convention center. Jack, a hotel owner, stands to benefit once the convention center is built. Jack decides to sue Nick if Nick backs out of the contract. Which of the following statements is true of this scenario?

• A) Jack cannot sue Nick because he is an incidental beneficiary.
• B) Jack can sue Nick because he is a donee beneficiary.
• C) Jack can sue Nick because Jack is a citizen of Chicago.
• D) Jack cannot sue Nick because he is a creditor beneficiary.

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Definitions:

Fixed Cost

Expenses that do not change with the amount of goods or services produced, such as rent, salaries, and insurance premiums.

Variable Cost

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production output.

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