Ethicist: In a recent judicial decision, a contractor was ordered to

E is the answer.

Premise: In a recent judicial decision, a contractor was ordered to make restitution to a company because of a bungled construction job, even though the company had signed a written agreement prior to entering into the contract that the contractor would not be financially liable should the task not be adequately performed.
Conclusion: Thus, it was morally wrong for the company to change its mind and seek restitution.

The argument is essentially saying that the actions of the company to seek restitution from the contractor is morally wrong. This is based on the premise that the company and the contractor entered into an agreement that the contractor would not be financially liable should the task not be adequately performed. We are to determine which of the answer choices justifies the reasoning of the Ethicist.

A: It is morally wrong for one party not to abide by its part of an agreement only if the other party abides by its part of the agreement. A says that the necessary condition for a party to abide by the terms of an agreement is that the other party must abide by its part of the agreement. No, the agreement is that no restitution will be paid by the contractor if the tasks are not performed adequately by the contractor. A is incorrect.

B: It is morally wrong to seek a penalty for an action for which the agent is unable to make restitution. The argument is not about whether an agent is able to make a restitution or not but rather about the terms of the agreement in which the contractor shall not be held financially liable for failure to perform the task adequately. B is incorrect.

C: It is morally wrong for one person to seek to penalize another person for an action that the first person induced the other person to perform. The Ethicist's argument is not about one person seeking to penalize another person for an induced action, but it's about the moral obligation of both parties to honor the terms of an agreement. C is incorrect.

D: It is morally wrong to ignore the terms of an agreement that was freely undertaken only if there is clear evidence that the agreement was legally permissible. The Ethicist's argument is about the moral obligation of parties of an agreement to honor the terms of an agreement. There should be no condition under which such an agreement should be dishonored. If D is true, then it weakens the argument or undermines the argument by the Ethicist. So, D is also incorrect.

E: It is morally wrong to seek compensation for an action performed in the context of a promise to forgo such compensation. This is correct. This option justifies the argument made by the Ethicist. A promise has been made in the form of an agreement that the company will not seek compensation from the contractor even if the contractor is unable to perform the work satisfactorily, and hence, the company is morally is wrong to seek compensation contrary to the agreement.