CPCU 530 - Practice Exam
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1. Miguel seeks to insure his personal auto to comply An express contract
with state regulations. He contacts an insurance agent
who provides Miguel with a personal auto policy with
Atlas Motorist Insurance Company ("Atlas"). Which
one of the following best describes the contractual
relationship between Miguel and Atlas?
2. Maria owns a commercial building and places insur- A bilateral contract
ance with Bastion Insurance. Because the annual pre-
mium is high, and cash is tight, Maria decides to enter
into a premium finance agreement with Finance Co.
("Finance"). Under the premium finance agreement,
Finance pays Bastion the full annual premium and
Maria pays Finance a monthly amount for the premi-
um, a fee and interest. At the midpoint of the policy
year, which one of the following best describes Maria's
premium finance agreement with Finance?
3. Daniel offers a ride to Lily, a ten-year-old, and takes It lacks a legal purpose.
her to his house where he locks her in his cellar and
demands money from Lily's parents to secure her re-
turn. The parents agree to pay and Lily is returned, but
Daniel never receives the money. He sues Lily's par-
ents for breach of contract. Which one of the following
explains why Daniel's contract with Lily's parents is not
legally binding?
4. Tool Corporation has operated successfully for Chapter 11
decades, but in recent years stiff price competition
from overseas suppliers and a lack of skilled labor
at affordable prices have made the company unprof-
itable. Tool Company has incurred substantial debt
, CPCU 530 - Practice Exam
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to keep the operation running and save jobs, but they
can no longer access bank financing. Tool Company
believes that it can return to profitability if it reorga-
nizes. Under which chapter of the bankruptcy code
should Tool Corporation file?
5. Located in a small midwestern town, Bin's Deli hires Employment at will
youthful workers and pays hourly wages. None of
their employees are members of a protected class.
Which one of the following legal concepts permits
Bin's Deli to release any of its employees at any time
for any reason, or no reason?
6. Fernanda runs a warehouse in New Jersey. The busi- UCC Article 7 permits Fer-
ness is successful because it has major highway ac- nanda to limit her liabil-
cess and is close to major consumer markets. Man- ity through terms in the
ufacturers from around the country store goods warehouse receipt.
bound for Northeastern customers at Fernanda's
warehouse. Given the large amount of goods stored
by others in her warehouse, Fernanda is concerned
about her exposure if something happens to the
warehouse or the goods, so she seek advice from a
lawyer about how to limit her exposure to loss. Which
one of the following best describes Fernanda's op-
tions in addressing this liability?
7. In February, Ann contracts with Mahdi to deliver clean The court would find
garden top soil for $30 a cubic yard to Mahdi's farm for Mahdi because Ann's
in Pennsylvania. No time for delivery is stated in their goods are non-conform-
contract but the parties understand that Mahdi wants ing.
to use the soil for this year's planting season. In
March, Ann delivers garden soil that is contaminated
, CPCU 530 - Practice Exam
Study online at https://quizlet.com/_ertra7
and Mahdi refuses to pay because he believes Ann
breached their agreement. Which one of the following
best describes how a court would rule on Mahdi's
claim that Ann breached their agreement?
8. Diego and Georgia meet in a bar and enjoy cocktails Diego lacked capacity to
together. Diego has many more drinks than Geor- enter into a contract be-
gia and is stumbling and slurring his speech. Sens- cause he was inebriated.
ing an opportunity, Georgia proposes that Diego sell
her his expensive Swiss wristwatch for a mere $100
and Diego agrees. The next day, Georgia appears at
Diego's office with $100 asking for the wristwatch.
Which one of the following arguments is best for
Diego to avoid the contract?
9. Erin has worked full-time for the last five years as a The law firm must offer
librarian for a law firm with 100 attorneys located in a Erin up to 12 weeks of un-
large downtown office building. Erin and her husband paid leave in a 12-month
are happy to announce that Erin is expecting a baby period, with no loss of ac-
in six months. She inquires with the law firm's human crued employment bene-
resources department about her rights for parental fits.
leave under the Family Medical Leave Act (FMLA).
Which one of the following best describes what the
law firm must offer Erin under the FMLA?
10. Tile Roofing is a contractor specializing in roof instal- Occupational Safety and
lation for homes and commercial accounts. Recently Health Act
several Tile Roofing workers have fallen and suffered
significant injuries because the workers do not have
any safety harnesses preventing falls. Under which
one of the following employee welfare laws would
, CPCU 530 - Practice Exam
Study online at https://quizlet.com/_ertra7
Tile Roofing potentially be subject to civil or criminal
penalties?
11. Mustafa met with his insurance agent Lucy to obtain Mustafa will win, if Del-
a businessowners policy. Lucy helped Mustafa com- mond's s delay on his ap-
plete an application and sent the signed application plication was unreason-
along with Mustafa's premium check to Delmond In- able.
surance Co. Delmond never responded to Mustafa.
Ninety days later, Mustafa had a loss to his business
that would have been covered by the Delmond policy.
If Mustafa files suit against Delmond to receive com-
pensation for his loss,
12. Larissa has a property policy covering her auto re- Policy analysis.
pair shop. The shop is totally destroyed by a fire. The
process of determining whether and to what extent
this specific loss is covered under Larissa's property
policy is known as
13. Which one of the following statements distinguishes Waiver is contractual in
estoppel from waiver? nature and rests upon
agreement between par-
ties.
14. With a contract of indemnity, the insurer agrees, in the An amount directly related
event of a covered loss, to pay to the amount of loss.
15. Which one of the following statements is true regard- Warranties may be either
ing warranties? material or immaterial and
are part of the final con-
tract.
16. For misrepresentation.
Study online at https://quizlet.com/_ertra7
1. Miguel seeks to insure his personal auto to comply An express contract
with state regulations. He contacts an insurance agent
who provides Miguel with a personal auto policy with
Atlas Motorist Insurance Company ("Atlas"). Which
one of the following best describes the contractual
relationship between Miguel and Atlas?
2. Maria owns a commercial building and places insur- A bilateral contract
ance with Bastion Insurance. Because the annual pre-
mium is high, and cash is tight, Maria decides to enter
into a premium finance agreement with Finance Co.
("Finance"). Under the premium finance agreement,
Finance pays Bastion the full annual premium and
Maria pays Finance a monthly amount for the premi-
um, a fee and interest. At the midpoint of the policy
year, which one of the following best describes Maria's
premium finance agreement with Finance?
3. Daniel offers a ride to Lily, a ten-year-old, and takes It lacks a legal purpose.
her to his house where he locks her in his cellar and
demands money from Lily's parents to secure her re-
turn. The parents agree to pay and Lily is returned, but
Daniel never receives the money. He sues Lily's par-
ents for breach of contract. Which one of the following
explains why Daniel's contract with Lily's parents is not
legally binding?
4. Tool Corporation has operated successfully for Chapter 11
decades, but in recent years stiff price competition
from overseas suppliers and a lack of skilled labor
at affordable prices have made the company unprof-
itable. Tool Company has incurred substantial debt
, CPCU 530 - Practice Exam
Study online at https://quizlet.com/_ertra7
to keep the operation running and save jobs, but they
can no longer access bank financing. Tool Company
believes that it can return to profitability if it reorga-
nizes. Under which chapter of the bankruptcy code
should Tool Corporation file?
5. Located in a small midwestern town, Bin's Deli hires Employment at will
youthful workers and pays hourly wages. None of
their employees are members of a protected class.
Which one of the following legal concepts permits
Bin's Deli to release any of its employees at any time
for any reason, or no reason?
6. Fernanda runs a warehouse in New Jersey. The busi- UCC Article 7 permits Fer-
ness is successful because it has major highway ac- nanda to limit her liabil-
cess and is close to major consumer markets. Man- ity through terms in the
ufacturers from around the country store goods warehouse receipt.
bound for Northeastern customers at Fernanda's
warehouse. Given the large amount of goods stored
by others in her warehouse, Fernanda is concerned
about her exposure if something happens to the
warehouse or the goods, so she seek advice from a
lawyer about how to limit her exposure to loss. Which
one of the following best describes Fernanda's op-
tions in addressing this liability?
7. In February, Ann contracts with Mahdi to deliver clean The court would find
garden top soil for $30 a cubic yard to Mahdi's farm for Mahdi because Ann's
in Pennsylvania. No time for delivery is stated in their goods are non-conform-
contract but the parties understand that Mahdi wants ing.
to use the soil for this year's planting season. In
March, Ann delivers garden soil that is contaminated
, CPCU 530 - Practice Exam
Study online at https://quizlet.com/_ertra7
and Mahdi refuses to pay because he believes Ann
breached their agreement. Which one of the following
best describes how a court would rule on Mahdi's
claim that Ann breached their agreement?
8. Diego and Georgia meet in a bar and enjoy cocktails Diego lacked capacity to
together. Diego has many more drinks than Geor- enter into a contract be-
gia and is stumbling and slurring his speech. Sens- cause he was inebriated.
ing an opportunity, Georgia proposes that Diego sell
her his expensive Swiss wristwatch for a mere $100
and Diego agrees. The next day, Georgia appears at
Diego's office with $100 asking for the wristwatch.
Which one of the following arguments is best for
Diego to avoid the contract?
9. Erin has worked full-time for the last five years as a The law firm must offer
librarian for a law firm with 100 attorneys located in a Erin up to 12 weeks of un-
large downtown office building. Erin and her husband paid leave in a 12-month
are happy to announce that Erin is expecting a baby period, with no loss of ac-
in six months. She inquires with the law firm's human crued employment bene-
resources department about her rights for parental fits.
leave under the Family Medical Leave Act (FMLA).
Which one of the following best describes what the
law firm must offer Erin under the FMLA?
10. Tile Roofing is a contractor specializing in roof instal- Occupational Safety and
lation for homes and commercial accounts. Recently Health Act
several Tile Roofing workers have fallen and suffered
significant injuries because the workers do not have
any safety harnesses preventing falls. Under which
one of the following employee welfare laws would
, CPCU 530 - Practice Exam
Study online at https://quizlet.com/_ertra7
Tile Roofing potentially be subject to civil or criminal
penalties?
11. Mustafa met with his insurance agent Lucy to obtain Mustafa will win, if Del-
a businessowners policy. Lucy helped Mustafa com- mond's s delay on his ap-
plete an application and sent the signed application plication was unreason-
along with Mustafa's premium check to Delmond In- able.
surance Co. Delmond never responded to Mustafa.
Ninety days later, Mustafa had a loss to his business
that would have been covered by the Delmond policy.
If Mustafa files suit against Delmond to receive com-
pensation for his loss,
12. Larissa has a property policy covering her auto re- Policy analysis.
pair shop. The shop is totally destroyed by a fire. The
process of determining whether and to what extent
this specific loss is covered under Larissa's property
policy is known as
13. Which one of the following statements distinguishes Waiver is contractual in
estoppel from waiver? nature and rests upon
agreement between par-
ties.
14. With a contract of indemnity, the insurer agrees, in the An amount directly related
event of a covered loss, to pay to the amount of loss.
15. Which one of the following statements is true regard- Warranties may be either
ing warranties? material or immaterial and
are part of the final con-
tract.
16. For misrepresentation.
