CPCU 530 LATEST 2026 EXAMINATION TEST QUESTIONS
AND ANSWERS GRADED A+
✔✔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.
✔✔Incompetent - ✔✔person who has impaired judgment and cannot legally enter into
business contracts.
✔✔Rescission - ✔✔A legal action that voids a principal's bid.
✔✔Void contract - ✔✔An agreement that, despite the parties' intentions, never reaches
contract status and is therefore not legally enforceable or binding.
✔✔Voidable contract - ✔✔A contract that one of the parties can reject (avoid) based on
some circumstance surrounding its execution.
✔✔Acceptance - ✔✔The assent to an offer that occurs when the party to whom an offer
has been made either agrees to the proposal or does what has been proposed.
✔✔Counteroffer - ✔✔A proposal an offeree makes to an offeror that varies in some
material way from the original offer, resulting in rejection of the original offer and
constituting a new offer.
✔✔Offer - ✔✔A promise that requires some action by the intended recipient to make an
agreement
✔✔Offeree - ✔✔The party to a contract who makes a promise or acts in return for
something offered by another party
✔✔Offeror - ✔✔The party to a contract who promises to give something in return for a
promise or an act by another party.
✔✔acceptance - ✔✔The assent to an offer that occurs when the party to whom an offer
has been made either agrees to the proposal or does what has been proposed.
✔✔COD (collect on delivery) - ✔✔A shipping condition under which the buyer pays
when the goods are delivered and has no right to inspect the goods as a condition to
acceptance and payment.
✔✔Substantial performance - ✔✔The performance of the primary, necessary terms of
an agreement.
✔✔Forbearance - ✔✔The act of giving up or the promise to give up a legal right.
, ✔✔Competence - ✔✔A quality of evidence that suggests the source is reliable and the
evidence is adequate to justify admission in court
✔✔Restitution - ✔✔The return of specific property by court order.
✔✔Good consideration - ✔✔Consideration based on natural love or affection, or on
moral duty, that is not sufficient to support a contract.
✔✔Good faith - ✔✔The manner of handling claims that requires an insurer to give
consideration to the insured's interests that is at least equal to the consideration it gives
its own interests.
✔✔Gratuitous promise - ✔✔A promise not supported by valuable consideration and,
therefore, not binding.
✔✔Promissory estoppel - ✔✔A legal principle that permits enforcement of a promise
made without consideration in order to prevent injustice.
✔✔Valuable consideration - ✔✔The consideration necessary and sufficient to support a
valid contract
✔✔Accord and satisfaction - ✔✔An agreement (accord) to substitute performance other
than that required in a contract and the carrying out of that agreement (satisfaction).
✔✔Negligence - ✔✔The failure to exercise the degree of care that a reasonable person
in a similar situation would exercise to avoid harming others.
✔✔Negligence per se - ✔✔An act that is considered inherently negligent because of a
violation of a law or an ordinance
✔✔Res ipsa loquitur - ✔✔A legal doctrine that provides that, in some circumstances,
negligence is inferred simply by an accident occurring.
✔✔Noncompete agreement - ✔✔An agreement between an employer (the principal)
and an employee (the agent) to protect the employer's customers, trade secrets,
confidential information, and other items for a specific period after an employee
relationship has been terminated
✔✔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
✔✔Severable contract - ✔✔A contract that includes two or more promises, each of
which a court can enforce separately.
AND ANSWERS GRADED A+
✔✔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.
✔✔Incompetent - ✔✔person who has impaired judgment and cannot legally enter into
business contracts.
✔✔Rescission - ✔✔A legal action that voids a principal's bid.
✔✔Void contract - ✔✔An agreement that, despite the parties' intentions, never reaches
contract status and is therefore not legally enforceable or binding.
✔✔Voidable contract - ✔✔A contract that one of the parties can reject (avoid) based on
some circumstance surrounding its execution.
✔✔Acceptance - ✔✔The assent to an offer that occurs when the party to whom an offer
has been made either agrees to the proposal or does what has been proposed.
✔✔Counteroffer - ✔✔A proposal an offeree makes to an offeror that varies in some
material way from the original offer, resulting in rejection of the original offer and
constituting a new offer.
✔✔Offer - ✔✔A promise that requires some action by the intended recipient to make an
agreement
✔✔Offeree - ✔✔The party to a contract who makes a promise or acts in return for
something offered by another party
✔✔Offeror - ✔✔The party to a contract who promises to give something in return for a
promise or an act by another party.
✔✔acceptance - ✔✔The assent to an offer that occurs when the party to whom an offer
has been made either agrees to the proposal or does what has been proposed.
✔✔COD (collect on delivery) - ✔✔A shipping condition under which the buyer pays
when the goods are delivered and has no right to inspect the goods as a condition to
acceptance and payment.
✔✔Substantial performance - ✔✔The performance of the primary, necessary terms of
an agreement.
✔✔Forbearance - ✔✔The act of giving up or the promise to give up a legal right.
, ✔✔Competence - ✔✔A quality of evidence that suggests the source is reliable and the
evidence is adequate to justify admission in court
✔✔Restitution - ✔✔The return of specific property by court order.
✔✔Good consideration - ✔✔Consideration based on natural love or affection, or on
moral duty, that is not sufficient to support a contract.
✔✔Good faith - ✔✔The manner of handling claims that requires an insurer to give
consideration to the insured's interests that is at least equal to the consideration it gives
its own interests.
✔✔Gratuitous promise - ✔✔A promise not supported by valuable consideration and,
therefore, not binding.
✔✔Promissory estoppel - ✔✔A legal principle that permits enforcement of a promise
made without consideration in order to prevent injustice.
✔✔Valuable consideration - ✔✔The consideration necessary and sufficient to support a
valid contract
✔✔Accord and satisfaction - ✔✔An agreement (accord) to substitute performance other
than that required in a contract and the carrying out of that agreement (satisfaction).
✔✔Negligence - ✔✔The failure to exercise the degree of care that a reasonable person
in a similar situation would exercise to avoid harming others.
✔✔Negligence per se - ✔✔An act that is considered inherently negligent because of a
violation of a law or an ordinance
✔✔Res ipsa loquitur - ✔✔A legal doctrine that provides that, in some circumstances,
negligence is inferred simply by an accident occurring.
✔✔Noncompete agreement - ✔✔An agreement between an employer (the principal)
and an employee (the agent) to protect the employer's customers, trade secrets,
confidential information, and other items for a specific period after an employee
relationship has been terminated
✔✔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
✔✔Severable contract - ✔✔A contract that includes two or more promises, each of
which a court can enforce separately.
