LOMA 311 EXAM TEST BANK
QUESTIONS WITH CORRECT
DETAILED ANSWERS
Holographic Will - Answer-a will that is handwritten and signed by the testator. Can
have an oral will, but only transfer limited property.
Codicil - Answer-a testamentary document that supplements a will. Add provisions,
revoke or alter provisions and explain provisions.
Probate Process - Answer-handling the distribution of estates of deceased persons.
Typically conducted under supervision of a local court-Probate court.
Executor - Answer-personal representative named in a will
Administrator - Answer-personal representative named by court if no will.
Copyright - Answer-a right granted by statute to author or originator of an original
literary or artistic work and gives the copyright holder the exclusive right to publish,
produce or perform the work for a specified time. In US, governed by federal law. For
works created prior to 1978, originator has protection for lifetime plus 70 years.
Infringement - Answer-any violation of exclusive rights belonging to owner of intellectual
property
Fair Use Doctrine - Answer-a legal doctrine that permits others to use limited portions of
a copyrighted work for purposes such as criticism, comment, news reporting, teaching,
scholarship, research.
Patent - Answer-governmental grant of property rights to the inventor or creator of an
original process, machine, manufactured article or chemical compound.
Trademark - Answer-a word, phrase, symbol, design or combination thereof that
identifies and distinguishes the source of one party's goods from those of other parties.
Service Mark - Answer-same as trademark, except it identifies and distinguishes source
of service rather than goods. They generally remain in force for 10 years. Can be
renewed with fee and filing with USPTO.
,Uniform Commercial Code (UCC) - Answer-model law created by the American Law
Institute and National Conference of Commissioners on Uniform State Laws to govern
commercial transactions. Create uniformity across jurisdictional lines.
Sale of goods - Answer-transfer of ownership of tangible personal property in exchange
for some other property, money or services.
Liquidated Damages - Answer-parties agree in advance to the amount of damages that
will be paid by the breaching party.
Negotiable Instruments - Answer-a written document that represents unconditional
promise or order to pay a specified amount of money upon the demand of the owner of
instrument.
Negotiability - Answer-possession of an instrument can be transferred from person to
person and instrument generally is accepted as substitute for cash. Negotiable
Instrument can be one of two forms: 1. Note-promise to pay a sum of money. 2. Draft-
instruction to pay a sum of money. Cashier's check, money order, traveler's check,
Certificate of Deposit.
Special Indorsement - Answer-a signature along with words indicating to whom the
instrument should be paid.
Blank Indorsement - Answer-signature only, no additional wording.
Restrictive Indorsement - Answer-signature with instructions as to how instrument can
be used.
Holder in Due Course - Answer-holder of a negotiable instrument who: paid value for
instrument, obtained it in good faith, and obtained it without knowledge of defenses or
claims against payment.
Assignment - Answer-transfer of ownership rights in property from property owner
(assignor) to another party (assignee). Usually used in intangible property.
Unsecured Transaction - Answer-creditor extends credit and receives only the debtor's
promise to pay debt. If debtor does not repay, creditor must sue and win to recover
payment.
Secured Transaction - Answer-creditor extends credit and receives a security interest in
debtor's property to guarantee creditor protected if default on loan.
Secured Party - Answer-creditor that obtains security interest in debtor's property.
Repossess car if default on loan.
,Continuation Statement - Answer-amends initial financing statement and continues the
effectiveness of that financing statement for a specified number of years.
Termination Statement - Answer-filed when debt is repaid and creditor no longer has a
security interest in debtor's property.
Bankruptcy - • Liquidation proceeding - Answer-debtor's assets are liquidated and
proceeds are used to pay creditors. Referred to as straight bankruptcies.
Bankruptcy - • Rehabilitation Proceeding - Answer-debtor can work out a plan for paying
creditors over a period of time.
Discharge - Answer-court order that relieves debtor from further obligation to pay debts
that were included in bankruptcy proceeding.
Reorganization Proceeding - Answer-debtor can work out plan for paying creditors.
Chapter 11. Typically used for businesses due to complexity.
Four requirements for Valid Insurance Contract - Answer-1. Parties must Mutually
Assent to the contract - one party make definite offer to contract and other party accepts
offer unconditionally.
2. Exchange legally adequate consideration
3. Must have Contractual Capacity
4. Contract must be for a lawful purpose
Insurable interest - Answer-a person is likely to benefit if insured continues to live and
likely to suffer loss or detriment if insured dies
Constructive Delivery - Answer-policy considered delivered even though never actually
reached policy owner. Considered constructive when insurer parts with control of policy
and intends to be bound by terms of contract.
Free Look Provision - Answer-gives policy owner specified period (10 days) following
deliver of policy to cancel policy and refund premiums.
Entire Contract Provision - Answer-defines documents that constitute the contract
between the insurer and policy owner.
Closed Contract - Answer-only terms and conditions that are printed (or attached to) the
contract are considered to be part of contract. Contract consists of policy, any attached
riders and endorsements and attached copy of application.
Police Power - Answer-
Open Contract - Answer-identifies documents that constitute the contract between
parties, but enumerated documents are not all attached to the contract.
, Temporary Insurance Agreement - Answer-provides coverage on insured before policy
is issued and delivered, although coverage may be subject to certain conditions
Condition - Answer-an uncertain event, the occurrence or nonoccurrence of which either
creates or extinguishes a party's duty to perform a contractual promise. Contractual
term that limits a party's promise.
Condition Precedent - Answer-condition that must occur in order to give rise to one
party's duty to perform a promise.
Condition Subsequent - Answer-a condition that, if it occurs, cancels one party's duty to
perform a promise.
Conditional Premium Receipt - Answer-provides temporary insurance coverage only if
specified conditions are met.
Insurability premium receipt - Answer-provides temp insurance coverage on condition
that insurer finds proposed insured to be standard or preferred risk
Approval Premium Receipt - Answer-provides temp coverage when insurer approves
the proposed insured as a standard or better than average risk. US rarely does these
Binding Premium Receipt - Answer-provides temp insurance coverage that becomes
effective on date specified in receipt. Provide temp coverage without specified
conditions being met. Remains effected until the earliest of: insurer issues the applicant
a policy, insurer declines the application, insurer terminates or suspends coverage
under receipt, a specified time (45-60 days) expires.
Vested Right - Answer-a right that cannot be altered or changed without consent of
person who owns the right.
Class Designation - Bene - Answer-identifies certain group of people, rather than
naming each person (my children, brothers and sisters). Advantage is members of the
class are not determined until insured dies. Disadvantage is must find all members of
class before proceeds are paid.
Per Capita Beneficiary Designation - Answer-class members all stand in same
relationship to owner and share equally in benefit. No descendants or heirs of deceased
class member gets benefit.
Per Stirpes Beneficiary Designation - Answer-descendants of a deceased class
member take the decedent's share of benefit. Each branch of family gets specific
amount, which would be divided by the number of survivors in the branch.
QUESTIONS WITH CORRECT
DETAILED ANSWERS
Holographic Will - Answer-a will that is handwritten and signed by the testator. Can
have an oral will, but only transfer limited property.
Codicil - Answer-a testamentary document that supplements a will. Add provisions,
revoke or alter provisions and explain provisions.
Probate Process - Answer-handling the distribution of estates of deceased persons.
Typically conducted under supervision of a local court-Probate court.
Executor - Answer-personal representative named in a will
Administrator - Answer-personal representative named by court if no will.
Copyright - Answer-a right granted by statute to author or originator of an original
literary or artistic work and gives the copyright holder the exclusive right to publish,
produce or perform the work for a specified time. In US, governed by federal law. For
works created prior to 1978, originator has protection for lifetime plus 70 years.
Infringement - Answer-any violation of exclusive rights belonging to owner of intellectual
property
Fair Use Doctrine - Answer-a legal doctrine that permits others to use limited portions of
a copyrighted work for purposes such as criticism, comment, news reporting, teaching,
scholarship, research.
Patent - Answer-governmental grant of property rights to the inventor or creator of an
original process, machine, manufactured article or chemical compound.
Trademark - Answer-a word, phrase, symbol, design or combination thereof that
identifies and distinguishes the source of one party's goods from those of other parties.
Service Mark - Answer-same as trademark, except it identifies and distinguishes source
of service rather than goods. They generally remain in force for 10 years. Can be
renewed with fee and filing with USPTO.
,Uniform Commercial Code (UCC) - Answer-model law created by the American Law
Institute and National Conference of Commissioners on Uniform State Laws to govern
commercial transactions. Create uniformity across jurisdictional lines.
Sale of goods - Answer-transfer of ownership of tangible personal property in exchange
for some other property, money or services.
Liquidated Damages - Answer-parties agree in advance to the amount of damages that
will be paid by the breaching party.
Negotiable Instruments - Answer-a written document that represents unconditional
promise or order to pay a specified amount of money upon the demand of the owner of
instrument.
Negotiability - Answer-possession of an instrument can be transferred from person to
person and instrument generally is accepted as substitute for cash. Negotiable
Instrument can be one of two forms: 1. Note-promise to pay a sum of money. 2. Draft-
instruction to pay a sum of money. Cashier's check, money order, traveler's check,
Certificate of Deposit.
Special Indorsement - Answer-a signature along with words indicating to whom the
instrument should be paid.
Blank Indorsement - Answer-signature only, no additional wording.
Restrictive Indorsement - Answer-signature with instructions as to how instrument can
be used.
Holder in Due Course - Answer-holder of a negotiable instrument who: paid value for
instrument, obtained it in good faith, and obtained it without knowledge of defenses or
claims against payment.
Assignment - Answer-transfer of ownership rights in property from property owner
(assignor) to another party (assignee). Usually used in intangible property.
Unsecured Transaction - Answer-creditor extends credit and receives only the debtor's
promise to pay debt. If debtor does not repay, creditor must sue and win to recover
payment.
Secured Transaction - Answer-creditor extends credit and receives a security interest in
debtor's property to guarantee creditor protected if default on loan.
Secured Party - Answer-creditor that obtains security interest in debtor's property.
Repossess car if default on loan.
,Continuation Statement - Answer-amends initial financing statement and continues the
effectiveness of that financing statement for a specified number of years.
Termination Statement - Answer-filed when debt is repaid and creditor no longer has a
security interest in debtor's property.
Bankruptcy - • Liquidation proceeding - Answer-debtor's assets are liquidated and
proceeds are used to pay creditors. Referred to as straight bankruptcies.
Bankruptcy - • Rehabilitation Proceeding - Answer-debtor can work out a plan for paying
creditors over a period of time.
Discharge - Answer-court order that relieves debtor from further obligation to pay debts
that were included in bankruptcy proceeding.
Reorganization Proceeding - Answer-debtor can work out plan for paying creditors.
Chapter 11. Typically used for businesses due to complexity.
Four requirements for Valid Insurance Contract - Answer-1. Parties must Mutually
Assent to the contract - one party make definite offer to contract and other party accepts
offer unconditionally.
2. Exchange legally adequate consideration
3. Must have Contractual Capacity
4. Contract must be for a lawful purpose
Insurable interest - Answer-a person is likely to benefit if insured continues to live and
likely to suffer loss or detriment if insured dies
Constructive Delivery - Answer-policy considered delivered even though never actually
reached policy owner. Considered constructive when insurer parts with control of policy
and intends to be bound by terms of contract.
Free Look Provision - Answer-gives policy owner specified period (10 days) following
deliver of policy to cancel policy and refund premiums.
Entire Contract Provision - Answer-defines documents that constitute the contract
between the insurer and policy owner.
Closed Contract - Answer-only terms and conditions that are printed (or attached to) the
contract are considered to be part of contract. Contract consists of policy, any attached
riders and endorsements and attached copy of application.
Police Power - Answer-
Open Contract - Answer-identifies documents that constitute the contract between
parties, but enumerated documents are not all attached to the contract.
, Temporary Insurance Agreement - Answer-provides coverage on insured before policy
is issued and delivered, although coverage may be subject to certain conditions
Condition - Answer-an uncertain event, the occurrence or nonoccurrence of which either
creates or extinguishes a party's duty to perform a contractual promise. Contractual
term that limits a party's promise.
Condition Precedent - Answer-condition that must occur in order to give rise to one
party's duty to perform a promise.
Condition Subsequent - Answer-a condition that, if it occurs, cancels one party's duty to
perform a promise.
Conditional Premium Receipt - Answer-provides temporary insurance coverage only if
specified conditions are met.
Insurability premium receipt - Answer-provides temp insurance coverage on condition
that insurer finds proposed insured to be standard or preferred risk
Approval Premium Receipt - Answer-provides temp coverage when insurer approves
the proposed insured as a standard or better than average risk. US rarely does these
Binding Premium Receipt - Answer-provides temp insurance coverage that becomes
effective on date specified in receipt. Provide temp coverage without specified
conditions being met. Remains effected until the earliest of: insurer issues the applicant
a policy, insurer declines the application, insurer terminates or suspends coverage
under receipt, a specified time (45-60 days) expires.
Vested Right - Answer-a right that cannot be altered or changed without consent of
person who owns the right.
Class Designation - Bene - Answer-identifies certain group of people, rather than
naming each person (my children, brothers and sisters). Advantage is members of the
class are not determined until insured dies. Disadvantage is must find all members of
class before proceeds are paid.
Per Capita Beneficiary Designation - Answer-class members all stand in same
relationship to owner and share equally in benefit. No descendants or heirs of deceased
class member gets benefit.
Per Stirpes Beneficiary Designation - Answer-descendants of a deceased class
member take the decedent's share of benefit. Each branch of family gets specific
amount, which would be divided by the number of survivors in the branch.
