AIC 301 LATEST COMPREHENSIVE EXAMS ALL
QUESTIONS AND ANSWERS SURE A+
✔✔contracts must be in a proper, legally stipulated form to be binding - ✔✔form
required by law
✔✔4 examples of contracts that have to be in writing - ✔✔1) sale of real estate
2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed
✔✔a contract where each party promises to perform an act in exchange for an act by
the other party - ✔✔bilateral contract
✔✔a contract where one party promises to pay for the act of the other party -
✔✔unilateral contract
✔✔contract where nothing more is required of either party to be fulfilled - ✔✔executed
contract
✔✔a contract that hasn't been fully executed - ✔✔executory contract
,✔✔contract where terms and intentions are clearly stated - ✔✔express contract
✔✔contract where terms and intentions are indicated by the actions of the parties to the
contract and the surrounding circumstances - ✔✔implied contract
✔✔parties presumably intended, either by tacit understanding or by the assumption that
it already existed - ✔✔implied-in-fact contracts
✔✔an obligation that is not an actual contract but that is imposed by law because of the
parties' conduct or some special relationship between them or because one of them
would otherwise be unjustly enriched - ✔✔implied-in-law contracts
✔✔sometimes called "quasi-contracts" - ✔✔implied-in-law contracts
✔✔a contract that one of the parties can reject (avoid) based on some circumstances
regarding its execution - ✔✔voidable contract
✔✔the _______________ of one of the contracting parties can make a contract
voidable - ✔✔behavior
✔✔an agreement that despite that parties' intentions, never reaches contract status and
is therefore not legally enforceable or binding - ✔✔void contract
✔✔ex. agreement to commit a crime (what type of contract?) - ✔✔void contact
✔✔5 factors lacking for mutual assent - ✔✔1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation
✔✔an intentional misrepresentation resulting in harm to a person or an organization -
✔✔fraud
✔✔2 remedies that can be sought if fraud is proven - ✔✔1) rescission
2) sue for damages
✔✔a legal act of cancelling something and making it void - ✔✔rescission
✔✔action taken if rescission can't make the plaintiff whole - ✔✔sue for damages
✔✔2 things insurers need to prove to establish fraudulent concealment - ✔✔1) insured
knew the fact concealed was material
,2) insured concealed the fact with the intent to defraud
✔✔mistakes can be ______________ or _________________ - ✔✔unilateral; bilateral
✔✔the use of restraint, violence, threats of violence, or wrongful pressure to compel a
party to act contrary to their wishes or interests - ✔✔duress
✔✔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 - ✔✔undue
influence
✔✔2 examples of undue influence - ✔✔1) gifts & wills
2) elderly persons suffering from physical ailments or dementia
✔✔when a person makes a false statement that they believes to be true - ✔✔innocent
misrepresentation
✔✔courts do not award monetary damages for _________________ misrepresentation
- ✔✔innocent
✔✔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 -
✔✔statute of frauds
✔✔a model code that has been adopted in whole or in part by each state and whose
purpose is to provide a consistent legal basis for business transactions throughout the
U.S. and its territories - ✔✔Uniform Commercial Code
✔✔written contracts must be ______________ by parties - ✔✔signed
✔✔rule that exists primarily to prevent oral evidence from a witness from being
introduced that could alter the terms of the contract - ✔✔parol evidence rule
✔✔applies to deeds, wills, leases, insurance policies, releases, etc. - ✔✔parole
evidence rule
✔✔3 purposes that Parol Evidence Rule serves - ✔✔1) carry out the parties' assumed
intention
2) achieve certainty and finality to the parties' rights & duties
3) exclude fraudulent & perjured claims
✔✔governed by well accepted guidelines intended to resolve doubts and ambiguities in
existing contracts - ✔✔contract interpretation
, ✔✔a contract's language is to be read and applied according to standard definitions,
even if the parties intended a different result - ✔✔plain meaning
✔✔one party must fulfill all terms of the contract to be entitled to the other party's
specified act - ✔✔entire contract
✔✔one party is entitled to payment for each portion of the contract completed -
✔✔divisible contract
✔✔courts prefer to interpret contracts as ________________ when possible to avoid
delaying payments - ✔✔divisible
✔✔prioritization of changes to printed contract:
_________________ > printing
_________________ > numbers - ✔✔handwriting; words
✔✔2 forms of ambiguity in contract law - ✔✔1) contractual provision can be interpreted
in more than one way
2) meaning of a provision cannot be determined
✔✔if something can be interpreted in more than one way- courts interpret least
favorable to the party who _____________ it, most favorable to the party who
_______________ it - ✔✔added; assented to
✔✔_________________ that parties show after entering into a contract carries a lot of
weight when courts are managing unclear terms - ✔✔conduct
✔✔if a contract can have legal and illegal purposes, courts will assume it had a/an
_____________ purpose - ✔✔legal
✔✔courts attempt to apply _____________ and _______________ interpretation -
✔✔fair; impartial
✔✔courts consider _____________ & ________________ meanings of terms and
common meanings of terms within an industry - ✔✔local; cultural
✔✔parties' ______________ course of dealings can take precedence over
_____________ meaning if the parties' intent isn't clear - ✔✔prior; trade
✔✔2 situations where third-parties have enforceable rights under contracts others have
made - ✔✔1) assignment of a contract
2) third-party beneficiary contracts
QUESTIONS AND ANSWERS SURE A+
✔✔contracts must be in a proper, legally stipulated form to be binding - ✔✔form
required by law
✔✔4 examples of contracts that have to be in writing - ✔✔1) sale of real estate
2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed
✔✔a contract where each party promises to perform an act in exchange for an act by
the other party - ✔✔bilateral contract
✔✔a contract where one party promises to pay for the act of the other party -
✔✔unilateral contract
✔✔contract where nothing more is required of either party to be fulfilled - ✔✔executed
contract
✔✔a contract that hasn't been fully executed - ✔✔executory contract
,✔✔contract where terms and intentions are clearly stated - ✔✔express contract
✔✔contract where terms and intentions are indicated by the actions of the parties to the
contract and the surrounding circumstances - ✔✔implied contract
✔✔parties presumably intended, either by tacit understanding or by the assumption that
it already existed - ✔✔implied-in-fact contracts
✔✔an obligation that is not an actual contract but that is imposed by law because of the
parties' conduct or some special relationship between them or because one of them
would otherwise be unjustly enriched - ✔✔implied-in-law contracts
✔✔sometimes called "quasi-contracts" - ✔✔implied-in-law contracts
✔✔a contract that one of the parties can reject (avoid) based on some circumstances
regarding its execution - ✔✔voidable contract
✔✔the _______________ of one of the contracting parties can make a contract
voidable - ✔✔behavior
✔✔an agreement that despite that parties' intentions, never reaches contract status and
is therefore not legally enforceable or binding - ✔✔void contract
✔✔ex. agreement to commit a crime (what type of contract?) - ✔✔void contact
✔✔5 factors lacking for mutual assent - ✔✔1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation
✔✔an intentional misrepresentation resulting in harm to a person or an organization -
✔✔fraud
✔✔2 remedies that can be sought if fraud is proven - ✔✔1) rescission
2) sue for damages
✔✔a legal act of cancelling something and making it void - ✔✔rescission
✔✔action taken if rescission can't make the plaintiff whole - ✔✔sue for damages
✔✔2 things insurers need to prove to establish fraudulent concealment - ✔✔1) insured
knew the fact concealed was material
,2) insured concealed the fact with the intent to defraud
✔✔mistakes can be ______________ or _________________ - ✔✔unilateral; bilateral
✔✔the use of restraint, violence, threats of violence, or wrongful pressure to compel a
party to act contrary to their wishes or interests - ✔✔duress
✔✔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 - ✔✔undue
influence
✔✔2 examples of undue influence - ✔✔1) gifts & wills
2) elderly persons suffering from physical ailments or dementia
✔✔when a person makes a false statement that they believes to be true - ✔✔innocent
misrepresentation
✔✔courts do not award monetary damages for _________________ misrepresentation
- ✔✔innocent
✔✔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 -
✔✔statute of frauds
✔✔a model code that has been adopted in whole or in part by each state and whose
purpose is to provide a consistent legal basis for business transactions throughout the
U.S. and its territories - ✔✔Uniform Commercial Code
✔✔written contracts must be ______________ by parties - ✔✔signed
✔✔rule that exists primarily to prevent oral evidence from a witness from being
introduced that could alter the terms of the contract - ✔✔parol evidence rule
✔✔applies to deeds, wills, leases, insurance policies, releases, etc. - ✔✔parole
evidence rule
✔✔3 purposes that Parol Evidence Rule serves - ✔✔1) carry out the parties' assumed
intention
2) achieve certainty and finality to the parties' rights & duties
3) exclude fraudulent & perjured claims
✔✔governed by well accepted guidelines intended to resolve doubts and ambiguities in
existing contracts - ✔✔contract interpretation
, ✔✔a contract's language is to be read and applied according to standard definitions,
even if the parties intended a different result - ✔✔plain meaning
✔✔one party must fulfill all terms of the contract to be entitled to the other party's
specified act - ✔✔entire contract
✔✔one party is entitled to payment for each portion of the contract completed -
✔✔divisible contract
✔✔courts prefer to interpret contracts as ________________ when possible to avoid
delaying payments - ✔✔divisible
✔✔prioritization of changes to printed contract:
_________________ > printing
_________________ > numbers - ✔✔handwriting; words
✔✔2 forms of ambiguity in contract law - ✔✔1) contractual provision can be interpreted
in more than one way
2) meaning of a provision cannot be determined
✔✔if something can be interpreted in more than one way- courts interpret least
favorable to the party who _____________ it, most favorable to the party who
_______________ it - ✔✔added; assented to
✔✔_________________ that parties show after entering into a contract carries a lot of
weight when courts are managing unclear terms - ✔✔conduct
✔✔if a contract can have legal and illegal purposes, courts will assume it had a/an
_____________ purpose - ✔✔legal
✔✔courts attempt to apply _____________ and _______________ interpretation -
✔✔fair; impartial
✔✔courts consider _____________ & ________________ meanings of terms and
common meanings of terms within an industry - ✔✔local; cultural
✔✔parties' ______________ course of dealings can take precedence over
_____________ meaning if the parties' intent isn't clear - ✔✔prior; trade
✔✔2 situations where third-parties have enforceable rights under contracts others have
made - ✔✔1) assignment of a contract
2) third-party beneficiary contracts
