AIC 301 Questions With All 100% Correct
Answers 2026 Update (A Pass)
1. .What are the elements of a legally binding contract?:
Answer:To be legally binding, contracts must
• Contain an agreement between all parties
• Involve parties with the legal capacity to contract
• Contain mutual assent
• Involve consideration
• Have a legal purpose
• Be in the form prescribed by law
2. What are the similarities and differences between bilateral and unilateral
contracts?:
Answer:In bilateral contracts, each party promises to perform an act in exchange for the act of the other party. In a
unilateral contract, one party promises to pay for an act of the other party. If the act isn't performed, no payment is
,required
3. What are the similarities and differences between voidable and void con- tracts?:
Answer: A voidable contract is a valid contract that can continue in force, and the parties can execute it completely
unless an innocent or injured party chooses to avoid it. The behavior of one of the contracting parties, such as an act of
fraud or illegal deceit, can also make a contract voidable. A void contract is an agreement that never met the necessary criteria
to be considered a contract
4. What are the two remedies available to the plaintiff if fraud is proved in a
given case?:
Answer: If fraud is proved, the plaintitt can seek one of two remedies: •
Rescission—If the court rescinds the contract, the plaintitt has no further duties under it and is entitled to reimburse- ment
of all payments made to the defendant. The plaintitt also must return anything of value received under the contract. The court's
goal is to restore the parties to the condition they were in before they entered the contract.
• Sue for damages—If rescission wouldn't make the plaintitt whole, the plaintitt can sue for damages in a tort action.
The plaintitt can seek compensatory damages for quantifiable harm and punitive damages to further punish the
defendant and deter future, similar fraudulent actions. The plaintitt must prove the extent of the loss to receive damages.
5. What are two things the insurer must prove to establish that fraudulent
,concealment occurred?:
Answer: To establish that fraudulent concealment occurred, the insurer must prove two
things:
• The insured knew that the fact concealed was material.
• The insured concealed the fact with the intent to defraud.
6. What is the difference between unilateral and bilateral mistakes in a con- tract?:
Answer:A unilateral mistake is made by one party to a contract. Bilateral mistakes occur when both parties to a contract
make the same mistake involving a material fact.
7. On what grounds can a person who has reasonably relied on an innocently
misrepresented material fact later avoid a contract?: A person who relies on a misrepre-
sented material fact can later avoid a resulting contract because he or she didn't achieve mutual assent
8. What is the purpose of the parol evidence rule?:
Answer:The parol evidence rule serves three purposes:
• Carry out the parties' presumed intention.
• Achieve certainty and finality as to the parties' rights and duties
. • Exclude fraudulent and perjured claims
, 9. How do courts resolve doubts and ambiguities in the language of a contract?-
Answer:: Courts use well-accepted interpretation guidelines to resolve doubts and ambiguities in an existing contract.
These
guidelines are not strict legal rules, and they aren't designed to create a new contract or rewrite an old one
10. . What's the difference between entire and divisible contracts?:
Answer:Contracts can be characterized as entire or divisible. In an entire contract, one party must fulfill all terms of
the contract to be entitled to the other party's specified act. In a divisible contract, one party is entitled to payment for
each portion of the contract completed
11. How do courts prioritize the types of changes that can be made to printed
contract forms?:
Answer:Courts prioritize any changes to printed contract forms in this order:
• Handwriting prevails over printing.
• Words prevail over numbers
12. Why might contract rights be unassignable?:
Answer:Contract rights are unassignable if:
• Laws restrict prior assignment of such rights as veterans disability benefits, government pensions, wages, inheri-
tances, and workers compensation benefits.
Answers 2026 Update (A Pass)
1. .What are the elements of a legally binding contract?:
Answer:To be legally binding, contracts must
• Contain an agreement between all parties
• Involve parties with the legal capacity to contract
• Contain mutual assent
• Involve consideration
• Have a legal purpose
• Be in the form prescribed by law
2. What are the similarities and differences between bilateral and unilateral
contracts?:
Answer:In bilateral contracts, each party promises to perform an act in exchange for the act of the other party. In a
unilateral contract, one party promises to pay for an act of the other party. If the act isn't performed, no payment is
,required
3. What are the similarities and differences between voidable and void con- tracts?:
Answer: A voidable contract is a valid contract that can continue in force, and the parties can execute it completely
unless an innocent or injured party chooses to avoid it. The behavior of one of the contracting parties, such as an act of
fraud or illegal deceit, can also make a contract voidable. A void contract is an agreement that never met the necessary criteria
to be considered a contract
4. What are the two remedies available to the plaintiff if fraud is proved in a
given case?:
Answer: If fraud is proved, the plaintitt can seek one of two remedies: •
Rescission—If the court rescinds the contract, the plaintitt has no further duties under it and is entitled to reimburse- ment
of all payments made to the defendant. The plaintitt also must return anything of value received under the contract. The court's
goal is to restore the parties to the condition they were in before they entered the contract.
• Sue for damages—If rescission wouldn't make the plaintitt whole, the plaintitt can sue for damages in a tort action.
The plaintitt can seek compensatory damages for quantifiable harm and punitive damages to further punish the
defendant and deter future, similar fraudulent actions. The plaintitt must prove the extent of the loss to receive damages.
5. What are two things the insurer must prove to establish that fraudulent
,concealment occurred?:
Answer: To establish that fraudulent concealment occurred, the insurer must prove two
things:
• The insured knew that the fact concealed was material.
• The insured concealed the fact with the intent to defraud.
6. What is the difference between unilateral and bilateral mistakes in a con- tract?:
Answer:A unilateral mistake is made by one party to a contract. Bilateral mistakes occur when both parties to a contract
make the same mistake involving a material fact.
7. On what grounds can a person who has reasonably relied on an innocently
misrepresented material fact later avoid a contract?: A person who relies on a misrepre-
sented material fact can later avoid a resulting contract because he or she didn't achieve mutual assent
8. What is the purpose of the parol evidence rule?:
Answer:The parol evidence rule serves three purposes:
• Carry out the parties' presumed intention.
• Achieve certainty and finality as to the parties' rights and duties
. • Exclude fraudulent and perjured claims
, 9. How do courts resolve doubts and ambiguities in the language of a contract?-
Answer:: Courts use well-accepted interpretation guidelines to resolve doubts and ambiguities in an existing contract.
These
guidelines are not strict legal rules, and they aren't designed to create a new contract or rewrite an old one
10. . What's the difference between entire and divisible contracts?:
Answer:Contracts can be characterized as entire or divisible. In an entire contract, one party must fulfill all terms of
the contract to be entitled to the other party's specified act. In a divisible contract, one party is entitled to payment for
each portion of the contract completed
11. How do courts prioritize the types of changes that can be made to printed
contract forms?:
Answer:Courts prioritize any changes to printed contract forms in this order:
• Handwriting prevails over printing.
• Words prevail over numbers
12. Why might contract rights be unassignable?:
Answer:Contract rights are unassignable if:
• Laws restrict prior assignment of such rights as veterans disability benefits, government pensions, wages, inheri-
tances, and workers compensation benefits.
