Chris Hires Delta Corporation to Inspect a House Under a Contract

question 27

Multiple Choice

Chris hires Delta Corporation to inspect a house under a contract drafted by Delta that limits Delta's liability "from any cause" to half of its $400 fee.Delta's inspector passes the house,which Chris buys.Defects soon be?come apparent,requiring repairs costing $10,000.Chris files a suit against Delta.Under the decision in Case 12.3,Lucier v.Williams,the limitation-of-li?ability clause is most likely

• A)enforceable because at the time of the contract,the amount of li?abil?ity was difficult to determine and the limit is reasonable.
• B)enforceable because both parties agreed to it.
• C)unenforceable because at the time of the contract,the amount of li?ability was too difficult to determine.
• D)unenforceable because the clause allows Delta to avoid almost all re?sponsibility for its negligence.

---

Definitions:

Absorption Costing

A strategy in accounting practice that aggregates all manufacturing expenses, from direct materials and labor to variable and fixed overheads, into the determination of a product's cost.

Break-Even Sales

The amount of revenue required to cover both the variable and fixed costs of a business, indicating no profit and no loss.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Commercial Segment

A portion of a market composed of businesses and organizations, as opposed to individual consumers.