AIC 301 SURE TIPS STUDY TEST QUESTIONS AND
ANSWERS SURE A+
✔✔Unilateral mistake - ✔✔A perception by one party to a contract that does not agree
with the facts
✔✔Bilateral mistake - ✔✔A perception by both parties to a contract that does not agree
with the facts.
✔✔Duress - ✔✔The use of restraint, violence, threats of violence, or wrongful pressure
to compel a party to act contrary to his or her wishes or interests
✔✔Undue influence - ✔✔The improper use of power or trust to deprive a person of free
will and substitute another's objective, resulting in lack of genuine assent to a contract
✔✔Parol evidence rule - ✔✔A provision that prevents the terms of a contract from being
modified by evidence of oral or other agreements after the contract has been written
✔✔Statute of frauds - ✔✔A law to prevent fraud and perjury by requiring that certain
contracts be in writing and contain the signature of the party responsible for performing
that contract.
,✔✔Real property (realty) - ✔✔Tangible property consisting of land, all structures
permanently attached to the land, and whatever is growing on the land.
✔✔Assignment - ✔✔The transfer of rights or property
✔✔Assignor - ✔✔The party to a contract who makes an assignment
✔✔Assignee - ✔✔The individual or entity to whom property, rights, or interests have
been transferred.
✔✔Third-party beneficiary contract - ✔✔A contract between two parties that benefits a
third party.
✔✔Creditor Beneficiary - ✔✔A third-party beneficiary owed a debt that is to be satisfied
by performance of a contract.
✔✔Donee Beneficiary - ✔✔A third-party beneficiary who receives the benefit of a
contract's performance as a gift from the promisee, with the intent of the contracting
parties.
✔✔incidental beneficiary - ✔✔A third-party beneficiary who has no contractual rights but
benefits from a contract even though that is not the intent of the parties to the contract.
✔✔Discharge - ✔✔The act of ending a contract, agreement, or obligation
✔✔Tender - ✔✔An offer to perform one's duties under a contract
✔✔Novation - ✔✔The act of substituting a contract with another contract, an obligation
with another obligation, or a party with another party or adding an obligation.
✔✔Accord and satisfaction - ✔✔An agreement (accord) to substitute performance other
than that required in a contract and the carrying out of that agreement (satisfaction)
✔✔Condition precedent - ✔✔An event that must occur before a duty of performance
arises in a contract
✔✔Condition concurrent - ✔✔An event that must occur at the same time as another
condition in a contract.
✔✔Condition subsequent - ✔✔An event that, if it occurs, discharges a duty of
performance in a contract.
✔✔Repudiation - ✔✔A party's refusal to meet obligations under a contract.
, ✔✔Anticipatory breach - ✔✔A party's unequivocal indication before contract
performance is due that he or she will not perform when performance is due.
✔✔Material breach of contract - ✔✔Violation of the agreement that would justify a
nonbreaching party's termination of the contract
✔✔Compensatory damages - ✔✔A payment awarded by a court to reimburse a victim
for actual harm.
✔✔Consequential damages - ✔✔A payment awarded by a court to indemnify an injured
party for losses that result indirectly from a wrong such as a breach of contract or a tort.
✔✔Punitive damages (exemplary damages) - ✔✔A payment awarded by a court to
punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct;
the award need not bear any relation to a party's actual damages.
✔✔Bad faith - ✔✔An insurer's intentional or reckless act (extreme or outrageous in
nature) or denial of coverage without proper cause, often causing emotional distress
and resulting in extracontractual and/or punitive damages.
✔✔Extracontractual damages - ✔✔A payment awarded by a court that exceeds the
usual contract damages for a breach of contract
✔✔Mitigation of damages - ✔✔A duty owed by an injured party to a claim to take
reasonable measures to minimize or avoid additional injury or loss
✔✔Liquidated damages - ✔✔A reasonable estimation of actual damages, agreed to by
contracting parties and included in the contract, to be paid in the event of a breach or for
negligence.
✔✔Specific performance - ✔✔A court-ordered equitable remedy requiring a party to
perform a certain act, often - but not always - as a result of breach of a contract.
✔✔Injunction - ✔✔A court-ordered equitable remedy requiring a party to act or refrain
from acting.
✔✔Conditional contract - ✔✔A contract that one or more parties must perform under
certain conditions
✔✔Utmost good faith - ✔✔An obligation to act in complete honesty and to disclose all
relevant facts
✔✔Misrepresentation - ✔✔A false statement of a material fact on which a party relies
ANSWERS SURE A+
✔✔Unilateral mistake - ✔✔A perception by one party to a contract that does not agree
with the facts
✔✔Bilateral mistake - ✔✔A perception by both parties to a contract that does not agree
with the facts.
✔✔Duress - ✔✔The use of restraint, violence, threats of violence, or wrongful pressure
to compel a party to act contrary to his or her wishes or interests
✔✔Undue influence - ✔✔The improper use of power or trust to deprive a person of free
will and substitute another's objective, resulting in lack of genuine assent to a contract
✔✔Parol evidence rule - ✔✔A provision that prevents the terms of a contract from being
modified by evidence of oral or other agreements after the contract has been written
✔✔Statute of frauds - ✔✔A law to prevent fraud and perjury by requiring that certain
contracts be in writing and contain the signature of the party responsible for performing
that contract.
,✔✔Real property (realty) - ✔✔Tangible property consisting of land, all structures
permanently attached to the land, and whatever is growing on the land.
✔✔Assignment - ✔✔The transfer of rights or property
✔✔Assignor - ✔✔The party to a contract who makes an assignment
✔✔Assignee - ✔✔The individual or entity to whom property, rights, or interests have
been transferred.
✔✔Third-party beneficiary contract - ✔✔A contract between two parties that benefits a
third party.
✔✔Creditor Beneficiary - ✔✔A third-party beneficiary owed a debt that is to be satisfied
by performance of a contract.
✔✔Donee Beneficiary - ✔✔A third-party beneficiary who receives the benefit of a
contract's performance as a gift from the promisee, with the intent of the contracting
parties.
✔✔incidental beneficiary - ✔✔A third-party beneficiary who has no contractual rights but
benefits from a contract even though that is not the intent of the parties to the contract.
✔✔Discharge - ✔✔The act of ending a contract, agreement, or obligation
✔✔Tender - ✔✔An offer to perform one's duties under a contract
✔✔Novation - ✔✔The act of substituting a contract with another contract, an obligation
with another obligation, or a party with another party or adding an obligation.
✔✔Accord and satisfaction - ✔✔An agreement (accord) to substitute performance other
than that required in a contract and the carrying out of that agreement (satisfaction)
✔✔Condition precedent - ✔✔An event that must occur before a duty of performance
arises in a contract
✔✔Condition concurrent - ✔✔An event that must occur at the same time as another
condition in a contract.
✔✔Condition subsequent - ✔✔An event that, if it occurs, discharges a duty of
performance in a contract.
✔✔Repudiation - ✔✔A party's refusal to meet obligations under a contract.
, ✔✔Anticipatory breach - ✔✔A party's unequivocal indication before contract
performance is due that he or she will not perform when performance is due.
✔✔Material breach of contract - ✔✔Violation of the agreement that would justify a
nonbreaching party's termination of the contract
✔✔Compensatory damages - ✔✔A payment awarded by a court to reimburse a victim
for actual harm.
✔✔Consequential damages - ✔✔A payment awarded by a court to indemnify an injured
party for losses that result indirectly from a wrong such as a breach of contract or a tort.
✔✔Punitive damages (exemplary damages) - ✔✔A payment awarded by a court to
punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct;
the award need not bear any relation to a party's actual damages.
✔✔Bad faith - ✔✔An insurer's intentional or reckless act (extreme or outrageous in
nature) or denial of coverage without proper cause, often causing emotional distress
and resulting in extracontractual and/or punitive damages.
✔✔Extracontractual damages - ✔✔A payment awarded by a court that exceeds the
usual contract damages for a breach of contract
✔✔Mitigation of damages - ✔✔A duty owed by an injured party to a claim to take
reasonable measures to minimize or avoid additional injury or loss
✔✔Liquidated damages - ✔✔A reasonable estimation of actual damages, agreed to by
contracting parties and included in the contract, to be paid in the event of a breach or for
negligence.
✔✔Specific performance - ✔✔A court-ordered equitable remedy requiring a party to
perform a certain act, often - but not always - as a result of breach of a contract.
✔✔Injunction - ✔✔A court-ordered equitable remedy requiring a party to act or refrain
from acting.
✔✔Conditional contract - ✔✔A contract that one or more parties must perform under
certain conditions
✔✔Utmost good faith - ✔✔An obligation to act in complete honesty and to disclose all
relevant facts
✔✔Misrepresentation - ✔✔A false statement of a material fact on which a party relies
