Question

What are some examples of legal and constructive obligation?

Answer 1

The liability may be a legal obligation or a constructive obligation. A constructive obligation arises from the entity's actions, through which it has indicated to others that it will accept certain responsibilities, and as a result has created an expectation that it will discharge those responsibilities

Answer 2

Answer:

A legal obligation is a promise to make a payment to a third party in accordance with an underlying contract. The entity's acts, through which it has communicated to others that it would accept certain duties, result in a constructive obligation.

Explanation:

Instances of what we understand by legal obligations:

A phrase used to describe a moral or legal obligation to carry out or refrain from carrying out an activity that is upheld by a court of law.

Examples include:

• It is not required by law to provide employees time off for the Olympic Games.
• It served as a legal reminder to both parties that they had a duty to safeguard medical people and facilities.
• Every business is required by law to produce an annual report.

A constructive obligation is what?

If past behaviour establishes a reasonable expectation on the part of a third party, such as a retail store with a long-standing policy of allowing customers to return goods within, say, a 30-day window, then a constructive obligation arises.

Examples include:

• Warranty for goods
• Pending Cases or Investigations
• Bank Promise
• lawsuit for intellectual property theft
• Government policy changes
• Exchange rate fluctuation
• Finished Damages

Thus, the liability may be a legal obligation or a constructive obligation.