CAIB 1 Chapter 1
What are the 3 categories of risks people usually face? - Answer-1. Personal Risk
2. Property Risk
3. Liability Risk
What 4 common options do people have when dealing with risk? And which is. Pat popular? - Answer-1.
Avoidance of Risk
2. Controlling of Risk
3. Retention of Risk
4. Transfer of Risk
Transfer of Risk is most popular.
What is Avoidance of Risk and does it work? - Answer-Avoidance means that all chance of financial loss
has been eliminated. It does not work, however, because in most cases one exposure to financial loss is
simply replaced with another
What is Controlling of Risk and does it work? - Answer-Risk control is concerned with taking measure to
reduce the frequency and severity of losses.
,Loss control measures are not a total solution in eliminating financial loss because:
-equipment will not work 100% if the time
-certain types of losses cannot be effectively controlled
What is Retention or Risk and does it work? - Answer-Large corporations and provincial and federal
governments often assume financial responsibility for their own losses. This is not practical for most
people or businesses as they cannot afford to totally finance their own losses.
What is Transfer of Risk and does it work? - Answer--Spread the losses of the few among the many!
-In exchange for a premium, insurance companies normally agree to assume the financial responsibility
of persons for their losses. This is the most popular and practical means of dealing with risk.
How many types of Risk are there, what are they, and which are insurable? - Answer-2 Types of Risk
1. Speculative
2. Pure
Only Pure is insurable
If a contract is to be enforceable by law it must have certain elements. How many elements and what
are they? - Answer-5 Elements:
1. Agreement:
2. Consideration
3. Legality of Object
, 4. Legal Capacity of the Parties to Contract
5. Genuine Intention
What must be present for an agreement to exist? - Answer--An offer made; and
-An unequivocal and unconditional acceptance of the terms of that offer
What form does the consideration in a contract usually take? - Answer--a return promise
-an act performed
-an agreement not to act
Is a contract intended for a purpose which is contrary to public policy enforceable at law? Why or why
not? - Answer-No, there must be Legality of Object.
Which persons are considered 'incompetents' and are protected in law from exploitation? - Answer-1.
Minors
2. Mental Incompetents
3. Persons Under the Influence of Alcohol or Drugs
4. Trade Names
What exception is extended to the legal capacity of minors? - Answer-The law gives minors the right to
contract for the necessities of life such as food, clothing, and lodging
Stupidly or mere mental weakness is not sufficient to void a contract. What is? - Answer-Mental
incompetents ➡️people who are insane, senile or possess other mental defects do not have the legal
capacity to contract
What are the 3 categories of risks people usually face? - Answer-1. Personal Risk
2. Property Risk
3. Liability Risk
What 4 common options do people have when dealing with risk? And which is. Pat popular? - Answer-1.
Avoidance of Risk
2. Controlling of Risk
3. Retention of Risk
4. Transfer of Risk
Transfer of Risk is most popular.
What is Avoidance of Risk and does it work? - Answer-Avoidance means that all chance of financial loss
has been eliminated. It does not work, however, because in most cases one exposure to financial loss is
simply replaced with another
What is Controlling of Risk and does it work? - Answer-Risk control is concerned with taking measure to
reduce the frequency and severity of losses.
,Loss control measures are not a total solution in eliminating financial loss because:
-equipment will not work 100% if the time
-certain types of losses cannot be effectively controlled
What is Retention or Risk and does it work? - Answer-Large corporations and provincial and federal
governments often assume financial responsibility for their own losses. This is not practical for most
people or businesses as they cannot afford to totally finance their own losses.
What is Transfer of Risk and does it work? - Answer--Spread the losses of the few among the many!
-In exchange for a premium, insurance companies normally agree to assume the financial responsibility
of persons for their losses. This is the most popular and practical means of dealing with risk.
How many types of Risk are there, what are they, and which are insurable? - Answer-2 Types of Risk
1. Speculative
2. Pure
Only Pure is insurable
If a contract is to be enforceable by law it must have certain elements. How many elements and what
are they? - Answer-5 Elements:
1. Agreement:
2. Consideration
3. Legality of Object
, 4. Legal Capacity of the Parties to Contract
5. Genuine Intention
What must be present for an agreement to exist? - Answer--An offer made; and
-An unequivocal and unconditional acceptance of the terms of that offer
What form does the consideration in a contract usually take? - Answer--a return promise
-an act performed
-an agreement not to act
Is a contract intended for a purpose which is contrary to public policy enforceable at law? Why or why
not? - Answer-No, there must be Legality of Object.
Which persons are considered 'incompetents' and are protected in law from exploitation? - Answer-1.
Minors
2. Mental Incompetents
3. Persons Under the Influence of Alcohol or Drugs
4. Trade Names
What exception is extended to the legal capacity of minors? - Answer-The law gives minors the right to
contract for the necessities of life such as food, clothing, and lodging
Stupidly or mere mental weakness is not sufficient to void a contract. What is? - Answer-Mental
incompetents ➡️people who are insane, senile or possess other mental defects do not have the legal
capacity to contract
