In All but One of the Following Situations, the Contract

question 8

Multiple Choice

In all but one of the following situations, the contract is frustrated. Identify the exception.

• A) On December 1, Pak contracted to buy Scott's horse. Delivery day was set for December 10. On December 8, the horse contracted rabies and had to be destroyed.
• B) Dubocovich had contracted to supply a health-food store jars of Melatonin, a hormone now thought to be a miracle potion. After the contract but before the delivery the government banned the sale of Melatonin so that it could be properly tested under government auspices.
• C) Issacs contracted to sing at the your club on March 10, but that morning the club was destroyed by lightning.
• D) Ed, a trucker with whom you contracted last month to transport stoves tomorrow, phones to tell you that his truck has broken down.
• E) You agree to paint Joe's house on the following Tuesday, and on the Monday before, through no fault of either party, it is destroyed by fire.

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Definitions:

Actual Costs

The real financial expenditures that a company incurs, as opposed to estimated or budgeted costs, including expenses for materials, labor, and overhead.

Standard Rate

A predetermined cost or charge established for a particular good or service.

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected (or standard) quantity, multiplied by the standard cost per unit.

Standard Quantity

The expected or budgeted quantity of materials, labor, or overhead needed for production, based on norms or standards.