Michael Motors enter into a business contract with Charles to sell Charles a car. The contract specifically states that upon the date that both parties sign the contract, Michael motors is not responsible for any damages that occur to the car during delivery to Charles' house. This is an example of what type of default rule?
A) Allocating loss
B) Allocating risk
C) Delivery risk
D) Possessory loss

Question

Quizplus · Accepted Answer

Allocating risk refers to the contractual agreement on which party bears the risk of loss or damage to goods during a transaction. In this scenario, the contract specifies that Michael Motors is not responsible for damages during delivery, thus allocating the risk of damage during delivery to Charles.

Michael Motors Enter into a Business Contract with Charles to Sell