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Dear Tutor,
What is the correct answer to this question please?
A company is in a legal dispute with a supplier. The supplier is making a claim for losses suffered as a result of an alleged breach of contract by the company. The supplier is claiming $750,000. The company has denied any liability but has offered $100,000 as an out-of-court settlement. The company’s lawyers have advised that if the case goes to court, the most likely outcome is that the company will lose the case and will be required to pay $400,000 in compensation to the supplier.
What amount should be provided in respect of the claim by the supplier?
A. Nothing
B. 100,000
C. 400,000
D. 750,000Huge thanks,
ValentinaI would have said 400,000 answer c – unless there is any indication of probability that the claimant will accept the out of court offer. In addition, the company should really disclose in their annual accountsthe fact that this claim is outstanding against them, unless it is resolved before the year end.
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