CPCU 530 LATEST 2026 EXAM QUESTIONS AND ANSWERS
GRADED A+
✔✔Estoppel arises in insurance law from these events: - ✔✔1. False representation of
a material fact
2. Reasonable reliance on the representation
3. Resulting injury or detriment to the insured
✔✔Nonwaiver agreement - ✔✔A signed agreement indicating that during the course of
investigation, neither the insurer nor the insured waives rights under the policy
✔✔Reservation of rights letter - ✔✔An insurers letter that specifies coverage issues and
informs the insured that the insurer is handling a claim with the understanding that the
insurer may later deny coverage should the facts warrant it.
✔✔Sales Contract - ✔✔agreement between a seller and a buyer that involves the
transfer of the ownership of goods for a price
✔✔3 Specialized Types of Sales Contracts: - ✔✔1. Sale on approval - sale to a
customer who wants to try the goods before buying them
2. Sale and return - Sale to a person who intends to resell the goofs but who has the
right to return them if they do not sell
3. Auction Sales - Public offering of goods for sale
✔✔Unilateral sales contract - ✔✔A promise is exchanged for an act
✔✔Bilateral sale contract - ✔✔Exchange of promises of future action
✔✔Statute of Frauds - ✔✔Provisions that deal with the unenforceability of certain
contracts that are not written and not properly signed / A collection of laws that help
prevent parties from becoming involved in fraudulently formed contracts
✔✔Buyers DO NOT have a right to inspection in 2 situations: - ✔✔• When the carrier
delivers the good COD (Collect on Delivery)
• When a contract requires the buyer to pay at the time of the delivery of the document
of title (unless the contract also requires payment only after the goods are available for
inspection)
✔✔Conforming goods - ✔✔goods stipulated in contract or fall within trade usage or prior
dealings
✔✔Non-conforming goods - ✔✔Goods that do not meet the contract obligations
✔✔Warranty - ✔✔Promise that something is true
,✔✔3 types of express warranties - - ✔✔• An affirmation of fact about the goods. Ex.
Seller's promise the goods are at a certain standard
• Any description of goods in a contract in a contract is a warranty the goods conform to
the description
• A contract based on a sample or model
✔✔Two types of implied warranties: - ✔✔1. Implied warranty of merchantability
2. Implied warranty of fitness for a particular purpose
✔✔Implied warranty of merchantability - ✔✔An implied warranty that a product is fit for
the ordinary purpose for which it is used. Applies only to transactions in which the seller
is a merchant. The goods must meet the following five qualifications:
1. The goods must pass w/o objection in the trade under the contract description
2. Fungible goods, such as grain, must be indistinguishable and interchangeable and
must be of average quality for the kind of goods sold
3. The goods must fit for the ordinary purpose for which they will be used
4. All goods in a lot must be approximately like kind and quality
✔✔Implied warranty of fitness for a particular purpose - ✔✔Applies to both merchants
and non-merchants. An implied warranty that a product is fit for a particular purpose;
applies if the seller knows about the buyer's purpose for the product
✔✔Implied warranty of title - ✔✔An implied promise in a contract for the sale of goofs
that the seller has legal ownership of goods and has no knowledge or any security
interest or other lien on the goods other than those disclosed to the buyer
✔✔Buyer can revoke an acceptance of goods under these circumstances: - ✔✔• The
buyer reasonably assumed that the seller would cure the defect but the seller did not do
so
• The buyer accepted the goods before discovering the nonconformity
• The buyer accepted the goods in the first place because it would have been difficult to
discover the defect and because the seller gave assurances about the quality of the
goods
✔✔Common check transactions: - ✔✔1. Failure to honor checks
2. Overdrafts
3. Altered checks
4. Stop payment orders
✔✔UCC Article 3 governs - ✔✔negotiable instruments payable to order (to a designated
payee) or to bearer (to the holder of the paper)
, ✔✔Holder in Due Course - ✔✔the person to whom a negotiable instrument has been
issued or endorsed and who possess it for value, in good faith and without notice that it
may not be valid, can be claimed by another, is overdue, or was previously dishonored
✔✔One who obtains an instrument in one of these ways does not become a holder in
due course: - ✔✔• Purchasing the instrument at a judicial sale or taking it under legal
process
• Acquiring it in taking over an estate
• Purchasing it as part of a bulk transaction (such as the purchase of all the assets of a
business), not in the regular course of the transferor's business
✔✔Bailment - ✔✔temporary transfer of a property's custody
✔✔Bailor - ✔✔The owner of the personal property in a bailment
✔✔Bailee - ✔✔The party temporarily possessing the personal property in a bailment
✔✔Consignor - ✔✔party who is shipping goods
✔✔Consignee - ✔✔The person or org. that receives property being transported by a
carrier
✔✔3 Purposes of a bill of lading: - ✔✔1. As a contract for the transportation of the
goods
2. As a receipt of the goods by the carrier for delivery
3. To identify the terms of the agreement, including goods by type and amount, the
consignor, the carrier, provisions of the agreement for shipping, any special instructions,
the consignee, date shipped, terms of delivery, and freight terms (prepaid, collect, or
from 3rd party)
✔✔Chattel - ✔✔Tangible, movable personal property
✔✔"Forms of collateral" - ✔✔1. Consumer goods
2. Equipment
3. Farm products
4. Inventory
5. Property on paper- Stocks bonds or chattel paper
✔✔3 forms of secured transactions - ✔✔1. Pledge - A security device by which a
borrower guarantees payment by delivering collateral to the lender to hold as security
for the debt
2. Chattel Mortgage
3. Conditional sale
GRADED A+
✔✔Estoppel arises in insurance law from these events: - ✔✔1. False representation of
a material fact
2. Reasonable reliance on the representation
3. Resulting injury or detriment to the insured
✔✔Nonwaiver agreement - ✔✔A signed agreement indicating that during the course of
investigation, neither the insurer nor the insured waives rights under the policy
✔✔Reservation of rights letter - ✔✔An insurers letter that specifies coverage issues and
informs the insured that the insurer is handling a claim with the understanding that the
insurer may later deny coverage should the facts warrant it.
✔✔Sales Contract - ✔✔agreement between a seller and a buyer that involves the
transfer of the ownership of goods for a price
✔✔3 Specialized Types of Sales Contracts: - ✔✔1. Sale on approval - sale to a
customer who wants to try the goods before buying them
2. Sale and return - Sale to a person who intends to resell the goofs but who has the
right to return them if they do not sell
3. Auction Sales - Public offering of goods for sale
✔✔Unilateral sales contract - ✔✔A promise is exchanged for an act
✔✔Bilateral sale contract - ✔✔Exchange of promises of future action
✔✔Statute of Frauds - ✔✔Provisions that deal with the unenforceability of certain
contracts that are not written and not properly signed / A collection of laws that help
prevent parties from becoming involved in fraudulently formed contracts
✔✔Buyers DO NOT have a right to inspection in 2 situations: - ✔✔• When the carrier
delivers the good COD (Collect on Delivery)
• When a contract requires the buyer to pay at the time of the delivery of the document
of title (unless the contract also requires payment only after the goods are available for
inspection)
✔✔Conforming goods - ✔✔goods stipulated in contract or fall within trade usage or prior
dealings
✔✔Non-conforming goods - ✔✔Goods that do not meet the contract obligations
✔✔Warranty - ✔✔Promise that something is true
,✔✔3 types of express warranties - - ✔✔• An affirmation of fact about the goods. Ex.
Seller's promise the goods are at a certain standard
• Any description of goods in a contract in a contract is a warranty the goods conform to
the description
• A contract based on a sample or model
✔✔Two types of implied warranties: - ✔✔1. Implied warranty of merchantability
2. Implied warranty of fitness for a particular purpose
✔✔Implied warranty of merchantability - ✔✔An implied warranty that a product is fit for
the ordinary purpose for which it is used. Applies only to transactions in which the seller
is a merchant. The goods must meet the following five qualifications:
1. The goods must pass w/o objection in the trade under the contract description
2. Fungible goods, such as grain, must be indistinguishable and interchangeable and
must be of average quality for the kind of goods sold
3. The goods must fit for the ordinary purpose for which they will be used
4. All goods in a lot must be approximately like kind and quality
✔✔Implied warranty of fitness for a particular purpose - ✔✔Applies to both merchants
and non-merchants. An implied warranty that a product is fit for a particular purpose;
applies if the seller knows about the buyer's purpose for the product
✔✔Implied warranty of title - ✔✔An implied promise in a contract for the sale of goofs
that the seller has legal ownership of goods and has no knowledge or any security
interest or other lien on the goods other than those disclosed to the buyer
✔✔Buyer can revoke an acceptance of goods under these circumstances: - ✔✔• The
buyer reasonably assumed that the seller would cure the defect but the seller did not do
so
• The buyer accepted the goods before discovering the nonconformity
• The buyer accepted the goods in the first place because it would have been difficult to
discover the defect and because the seller gave assurances about the quality of the
goods
✔✔Common check transactions: - ✔✔1. Failure to honor checks
2. Overdrafts
3. Altered checks
4. Stop payment orders
✔✔UCC Article 3 governs - ✔✔negotiable instruments payable to order (to a designated
payee) or to bearer (to the holder of the paper)
, ✔✔Holder in Due Course - ✔✔the person to whom a negotiable instrument has been
issued or endorsed and who possess it for value, in good faith and without notice that it
may not be valid, can be claimed by another, is overdue, or was previously dishonored
✔✔One who obtains an instrument in one of these ways does not become a holder in
due course: - ✔✔• Purchasing the instrument at a judicial sale or taking it under legal
process
• Acquiring it in taking over an estate
• Purchasing it as part of a bulk transaction (such as the purchase of all the assets of a
business), not in the regular course of the transferor's business
✔✔Bailment - ✔✔temporary transfer of a property's custody
✔✔Bailor - ✔✔The owner of the personal property in a bailment
✔✔Bailee - ✔✔The party temporarily possessing the personal property in a bailment
✔✔Consignor - ✔✔party who is shipping goods
✔✔Consignee - ✔✔The person or org. that receives property being transported by a
carrier
✔✔3 Purposes of a bill of lading: - ✔✔1. As a contract for the transportation of the
goods
2. As a receipt of the goods by the carrier for delivery
3. To identify the terms of the agreement, including goods by type and amount, the
consignor, the carrier, provisions of the agreement for shipping, any special instructions,
the consignee, date shipped, terms of delivery, and freight terms (prepaid, collect, or
from 3rd party)
✔✔Chattel - ✔✔Tangible, movable personal property
✔✔"Forms of collateral" - ✔✔1. Consumer goods
2. Equipment
3. Farm products
4. Inventory
5. Property on paper- Stocks bonds or chattel paper
✔✔3 forms of secured transactions - ✔✔1. Pledge - A security device by which a
borrower guarantees payment by delivering collateral to the lender to hold as security
for the debt
2. Chattel Mortgage
3. Conditional sale
