An Agreement for the Purchase and Sale of Property Included

question 99

Multiple Choice

An agreement for the purchase and sale of property included the following words: "Subject to the purchaser obtaining satisfactory financing by 5 p.m. on Friday, February 22, 2011." If the court held that this subject-to clause was so vague that "the entire contract was void for uncertainty," this would mean that

• A) the contract was in existence but could not be enforced.
• B) the contract was in existence but one party has the right to repudiate the contract.
• C) the contract was never in existence.
• D) the court will impose a reasonable alternative for the term in question.
• E) the contract is in existence but the court will not do anything to help the parties.

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Definitions:

GAAP Reporting

The standard framework of guidelines for financial accounting that includes the details, complexities, and legalities of business and corporate accounting. GAAP stands for Generally Accepted Accounting Principles.

LIFO Reserve

The difference between the cost of inventory calculated using the Last In, First Out method and the First In, First Out method, reflecting the impact of inflation on inventory valuation.

Balance Sheet

A summary document detailing a firm's assets, liabilities, and equity held by shareholders at a certain moment.

Cumulative Effect

The total impact of one or more changes in accounting policies or corrections of errors made in previous years, reflected in the current year's financial statements.