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Moderate

Contracts

GMAT-NOJXQ4

A construction company is taken to court by a client for failure to comply with the company-drafted contract to build an office building located near a stream. The client claims that the company should be liable for fines related to improper wastewater management because it failed to complete an environmental study, citing the clause stating, "The construction company will perform an environmental study to determine the impact of the building on local water reservoirs."

The company claims it did complete the study and that the client is responsible as it had signed off on the proposed plans after reviewing the study. In making a decision, the judge sides with the client, citing two prior contract disputes. In one, a company was found liable for damages because it promised "fair and reasonable payments" for work performed by the client. In the second, a company was found liable for damages because it promised "customer satisfaction or your money back."

Which of the following best explains the judge's decision?

A

The judge prefers to side with the "underdog" in court cases.

B

Each of the contracts contained vague terms that favored the companies.

C

All of the companies actively sought to get more money from their clients.

D

The judge is protecting naive clients from large, powerful companies.

E

The clients all hired lawyers specializing in contract disputes.