CPCU 530 Study Questions
and Complete Solutions
Graded A+
Which one of the following best explains how a successful litigant enforces an arbitration award?
Select one:
A. The winning party can take the arbitrator's award directly to a sheriff to mandate compliance with the
decision.
B. An arbitrator cannot award money, but the decision can be used as persuasive evidence in a real
court.
C. An arbitrator's award is filed with the appropriate court and is as enforceable as any court judgment.
D. The parties participating in the arbitration agree in a contract to comply with the arbitrator's decision.
- Answer: C. An arbitrator's award is filed with the appropriate court and is as enforceable as any court
judgment.
Jessica operates her architectural business out of her home. She obtains her business and personal
insurance through Glaston Insurance Agency (GIA). Daniel, the agent at GIA, neglected to tell Jessica that
professional liability coverage was excluded when she purchased the coverage for her business. When
the deck on her house collapses, Lily files a suit against Jessica's architectural business. It is soon
discovered that Jessica's coverage from GIA does not include professional liability coverage, and that
Jessica does not have adequate funds to compensate Lily. Lily decides to file a suit against Daniel. Which
one of the following statements is correct regarding Lily's right to sue Daniel?
Select one:
A. Because the circumstances involve professional liability exposures, most courts will interpret that Lily,
as a third party, has the right to sue Daniel.
B. Lily, as a third party, has the right to sue Daniel for hi - Answer: C. Lily was not a party to the Daniel
and Jessica's producer-customer relationship, and therefore has no rights under the contract.
The Jet Hotel had an old, dangerous boiler in the basement that was rarely used. The Occupational
Health and Safety Administration (OSHA) had no safety standards for this particular boiler, but did have
standards for similar pieces of equipment. The Jet Hotel's management took no steps to make the boiler
safe. One day, the boiler exploded. No one was seriously hurt, but nine employees were treated with
first aid. The management did not record these injuries or report the accident to OSHA. Which one of
the following OSHA requirements or standards has the management violated?
,Select one:
A. The general duty clause
B. The reporting requirement
C. The recordkeeping requirement
D. The specific safety standard for boilers - Answer: A. The general duty clause
Which one of the following is a necessary element for a document to be considered a title under
Uniform Commercial Code (UCC) Article 7?
Select one:
A. The document gives the holder the right to receive, hold, and dispose of both the goods and the
document of title itself.
B. The document is a contract to ship, store, or dispose of goods.
C. The document is negotiable.
D. The document is created by the bailee as a receipt for goods received. - Answer: D. The document is
created by the bailee as a receipt for goods received.
Justine contracted to create Charlotte's wedding gown by next June. Later, Justine and Charlotte agreed
that Tammy would make the gown, and Charlotte expressly released Justine from the original contract.
Which one of the following statements is true?
Select one:
A. There was a discharge by performance.
B. There was a personal satisfaction contract.
C. There was an agreement to rescind.
D. There was substantial performance of a contract. - Answer: C. There was an agreement to rescind.
Ralph is the director of a fraternal organization that is a not-for-profit association. Ralph volunteers his
time to manage the organization, and he is not paid a salary nor does he receive any type of non-
monetary compensation. Which one of the following statements regarding Ralph's role as director of the
fraternal association is true?
Select one:
A. Since Ralph receives no compensation, his standard of care owed to the association is less than that
of a compensated corporate director.
,B. Ralph, as a member of the fraternal association, has no property rights in the association's assets.
C. As an association director, Ralph has legal rights and duties that differ from those of a corporate
director.
D. Ralph cannot be sued by a member of the association but the fraternal association itself may be sued
by a member who has suffered damage. - Answer: A. Since Ralph receives no compensation, his
standard of care owed to the association is less than that of a compensated corporate director.
To perfect a security interest in a negotiable instrument, one should
Select one:
A. Take actual possession of the instrument.
B. Create a document of constructive notice.
C. Negotiate a termination statement with the debtor.
D. File a finance statement in the proper county office. - Answer: A. Take actual possession of the
instrument.
Transferring actual possession is the only way to perfect a security interest in a negotiable instrument,
such as a bearer bond, because delivery transfers ownership
In bailments for mutual benefit, the bailee can use the property
Select one:
A. Only as specified within the bailment agreement or contract.
B. In any way that has reasonably been contemplated by the bailor.
C. In any way that is necessary to accomplish the mutual goal, as long as the bailee uses reasonable care.
D. Only to the extent necessary to preserve and protect it. - Answer: A. Only as specified within the
bailment agreement or contract.
In bailments for mutual benefit, the bailee can use the property only as specified within the bailment
agreement or contract. For ex., a person who leases a car can use it only according to the lease
agreement's terms.
Anna is the lawyer for the plaintiff in a jury trial. She is preparing her opening statement. Which one of
the following correctly describes what Anna should do during her opening statement?
, Select one:
A. During her opening statement, Anna should instruct the jury about any applicable laws.
B. During her opening statement, Anna should present a summary of what she expects to prove.
C. During her opening statement, Anna should challenge the testimony and evidence of the defendant.
D. During her opening statement, Anna present a summary of all of the evidence that she plans to
present. - Answer: B. During her opening statement, Anna should present a summary of what she
expects to prove.
During her opening statement, Anna should present a summary of what she expects to prove. She
should summarize the evidence during her closing statement.
A complete contract of sale for real property usually includes which one of the following elements?
Select one:
A. Oral agreement
B. Warranty deed
C. Nonessential terms
D. Definition of conditions - Answer: C. Nonessential terms
Certain terms are nonessential but are usually covered in a complete contract of sale, such as time of
closing and payment terms.
Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy was a car loan
financed by Lending Bank for $8,000. Which one of the following must Merve do to enforce a new
promise to pay this debt and make payments once again on this contract?
Select one:
A. She must acknowledge the debt.
B. No additional consideration is required.
C. She must make no additional promises to pay.
D. She must pay additional consideration. - Answer: B. No additional consideration is required.
A new promise to pay a debt barred by bankruptcy is enforceable without any additional consideration.
and Complete Solutions
Graded A+
Which one of the following best explains how a successful litigant enforces an arbitration award?
Select one:
A. The winning party can take the arbitrator's award directly to a sheriff to mandate compliance with the
decision.
B. An arbitrator cannot award money, but the decision can be used as persuasive evidence in a real
court.
C. An arbitrator's award is filed with the appropriate court and is as enforceable as any court judgment.
D. The parties participating in the arbitration agree in a contract to comply with the arbitrator's decision.
- Answer: C. An arbitrator's award is filed with the appropriate court and is as enforceable as any court
judgment.
Jessica operates her architectural business out of her home. She obtains her business and personal
insurance through Glaston Insurance Agency (GIA). Daniel, the agent at GIA, neglected to tell Jessica that
professional liability coverage was excluded when she purchased the coverage for her business. When
the deck on her house collapses, Lily files a suit against Jessica's architectural business. It is soon
discovered that Jessica's coverage from GIA does not include professional liability coverage, and that
Jessica does not have adequate funds to compensate Lily. Lily decides to file a suit against Daniel. Which
one of the following statements is correct regarding Lily's right to sue Daniel?
Select one:
A. Because the circumstances involve professional liability exposures, most courts will interpret that Lily,
as a third party, has the right to sue Daniel.
B. Lily, as a third party, has the right to sue Daniel for hi - Answer: C. Lily was not a party to the Daniel
and Jessica's producer-customer relationship, and therefore has no rights under the contract.
The Jet Hotel had an old, dangerous boiler in the basement that was rarely used. The Occupational
Health and Safety Administration (OSHA) had no safety standards for this particular boiler, but did have
standards for similar pieces of equipment. The Jet Hotel's management took no steps to make the boiler
safe. One day, the boiler exploded. No one was seriously hurt, but nine employees were treated with
first aid. The management did not record these injuries or report the accident to OSHA. Which one of
the following OSHA requirements or standards has the management violated?
,Select one:
A. The general duty clause
B. The reporting requirement
C. The recordkeeping requirement
D. The specific safety standard for boilers - Answer: A. The general duty clause
Which one of the following is a necessary element for a document to be considered a title under
Uniform Commercial Code (UCC) Article 7?
Select one:
A. The document gives the holder the right to receive, hold, and dispose of both the goods and the
document of title itself.
B. The document is a contract to ship, store, or dispose of goods.
C. The document is negotiable.
D. The document is created by the bailee as a receipt for goods received. - Answer: D. The document is
created by the bailee as a receipt for goods received.
Justine contracted to create Charlotte's wedding gown by next June. Later, Justine and Charlotte agreed
that Tammy would make the gown, and Charlotte expressly released Justine from the original contract.
Which one of the following statements is true?
Select one:
A. There was a discharge by performance.
B. There was a personal satisfaction contract.
C. There was an agreement to rescind.
D. There was substantial performance of a contract. - Answer: C. There was an agreement to rescind.
Ralph is the director of a fraternal organization that is a not-for-profit association. Ralph volunteers his
time to manage the organization, and he is not paid a salary nor does he receive any type of non-
monetary compensation. Which one of the following statements regarding Ralph's role as director of the
fraternal association is true?
Select one:
A. Since Ralph receives no compensation, his standard of care owed to the association is less than that
of a compensated corporate director.
,B. Ralph, as a member of the fraternal association, has no property rights in the association's assets.
C. As an association director, Ralph has legal rights and duties that differ from those of a corporate
director.
D. Ralph cannot be sued by a member of the association but the fraternal association itself may be sued
by a member who has suffered damage. - Answer: A. Since Ralph receives no compensation, his
standard of care owed to the association is less than that of a compensated corporate director.
To perfect a security interest in a negotiable instrument, one should
Select one:
A. Take actual possession of the instrument.
B. Create a document of constructive notice.
C. Negotiate a termination statement with the debtor.
D. File a finance statement in the proper county office. - Answer: A. Take actual possession of the
instrument.
Transferring actual possession is the only way to perfect a security interest in a negotiable instrument,
such as a bearer bond, because delivery transfers ownership
In bailments for mutual benefit, the bailee can use the property
Select one:
A. Only as specified within the bailment agreement or contract.
B. In any way that has reasonably been contemplated by the bailor.
C. In any way that is necessary to accomplish the mutual goal, as long as the bailee uses reasonable care.
D. Only to the extent necessary to preserve and protect it. - Answer: A. Only as specified within the
bailment agreement or contract.
In bailments for mutual benefit, the bailee can use the property only as specified within the bailment
agreement or contract. For ex., a person who leases a car can use it only according to the lease
agreement's terms.
Anna is the lawyer for the plaintiff in a jury trial. She is preparing her opening statement. Which one of
the following correctly describes what Anna should do during her opening statement?
, Select one:
A. During her opening statement, Anna should instruct the jury about any applicable laws.
B. During her opening statement, Anna should present a summary of what she expects to prove.
C. During her opening statement, Anna should challenge the testimony and evidence of the defendant.
D. During her opening statement, Anna present a summary of all of the evidence that she plans to
present. - Answer: B. During her opening statement, Anna should present a summary of what she
expects to prove.
During her opening statement, Anna should present a summary of what she expects to prove. She
should summarize the evidence during her closing statement.
A complete contract of sale for real property usually includes which one of the following elements?
Select one:
A. Oral agreement
B. Warranty deed
C. Nonessential terms
D. Definition of conditions - Answer: C. Nonessential terms
Certain terms are nonessential but are usually covered in a complete contract of sale, such as time of
closing and payment terms.
Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy was a car loan
financed by Lending Bank for $8,000. Which one of the following must Merve do to enforce a new
promise to pay this debt and make payments once again on this contract?
Select one:
A. She must acknowledge the debt.
B. No additional consideration is required.
C. She must make no additional promises to pay.
D. She must pay additional consideration. - Answer: B. No additional consideration is required.
A new promise to pay a debt barred by bankruptcy is enforceable without any additional consideration.
