Question

Which of the following is typically not a characteristic of a constructive obligation? It is a...

Which of the following is typically not a characteristic of a constructive obligation?

It is a term that is explicitly stated in the contract.

It may be created through past practice or experience.

It may be created though a signal to potential customers.

It is not legally enforceable.
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Answer #1

Answer: Option i) It is a term is explicitly stated in the contract.

Explanation:

A constructive obligation is an obligation to pay that arises out of conduct and intent rather than a contract and a constructive obligation recorded int he liability side of a balance sheet.

The following characteristics of a constructive obligation are:

It may be created through past practice or experience.

It may be created though a signal to potential customers.

It is not legally enforceable.

Therefore, It is a term is explicitly stated in the contract is not a characteristic of a constructive obligation.

Thus, option i) is correct and remaining options are incorrect.

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