AIC 301 - Final Exam Prep Questions With 100% Correct Answers 2026

AIC 301 - Final Exam Prep Questions With 100% Correct Answers 2026 The act of leaving a dangerous article such as a gun or car with a person who the lender knows, or should know, is likely to use it in an unreasonably risky manner is known as Select one: A. Negligent entrustment. B. Contributory negligence. C. Negligent supervision. D. The dangerous instrumentality doctrine. - answer-A. Negligent entrustment. There was a large unmarked sinkhole on Charlotte's property, a short distance from a public road. One evening, a police officer chased a mugger off the road and onto Charlotte's property. Both the officer and the mugger fell into the hole and were injured. Which one of the following best answers whether Charlotte is liable for the injuries to the police officer and/or to the mugger? Select one: A. Charlotte is not liable to either the officer or the mugger, because occupiers of land have no duty to correct defects abutting sidewalks or streets. B. Charlotte is liable to both the officer and the mugger, because she had a duty to avoid endangering travelers with an unguarded ditch. C. Charlotte is not liable to the officer or the mugger, because they were both trespassers on her property. D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the tres - answer-D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger.Antonia was a life tenant who occupied a house at 33 Main Street. Emil had a remainder interest in the property and planned to occupy it after Antonia's death. Antonia obtained property insurance covering the house, through Richley Insurance Co. The house was destroyed by fire during Antonia's life estate. Richley must pay the insurance policy proceeds to Select one: A. Emil, under the doctrine of equitable conversion. B. Antonia, since she occupied the house at the time of the fire. C. Antonia, because life tenants can recover the entire value of the property that they insure. D. Emil, because he will ultimately own the property. - answer-C. Antonia, because life tenants can recover the entire value of the property that they insure. Cristobal is in the process of purchasing a home from Leah. They are in the executory period. This means that Select one: A. Cristobal and Leah have signed the real estate sales contract, but have not yet closed. B. Cristobal has made an offer and Leah has accepted verbally. C. Cristobal and Leah have signed the real estate sales contract and have gone to closing. D. Cristobal has made a verbal offer, which Leah is considering. - answer-A. Cristobal and Leah have signed the real estate sales contract, but have not yet closed. Kirk contracts with Ernest for five shipments of fresh produce at a specific price per shipment due at the time of delivery. Kirk fails to ship the third shipment. The contract between Kirk and Ernest is Select one: A. Void. B. Unilateral. C. Divisible. D. Entire. - answer-C. Divisible. A contract is divisible if each party's performance can be divided into two or more parts and if it appears that the parties to the contract contemplated separatecompensation for each installment of the performance. Failure to perform one installment is not failure to perform the entire agreement. If the contract is divided into parts only to provide periodic payments toward the full amount due upon contract completion, the contract is an entire contract, not a divisible one. When possible, courts prefer to interpret contracts as divisible to avoid hardships that can result from delaying payments under the contract until full performance has been completed. Fatima owns a cafe that is open to the public. Kaito enters the cafe and orders a coffee. Kaito is a(n) Select one: A. Public invitee. B. Business invitee. C. Express licensee. D. Trespasser. - answer-B. Business invitee. James wants to pursue a legal claim against his neighbor, but he does not know what kind of dispute resolution procedure is the best choice for his situation. The dispute is over a relatively small amount of money, so James does not want to spend a lot in pursuit of his claim. James wants to be able to present his side of the story and his witnesses before a neutral third party. James would be pleased if he and his neighbor could reach a compromise, but, ideally, James wants to be able to walk away with a binding decision. Assuming that James' neighbor will agree to participate in whatever procedure James suggests, which one of the following dispute resolution procedures is the best choice for James? Select one: A. Mediation B. Negotiation C. Arbitration D. Litigation - answer-C. ArbitrationChloe is investigating Thomas' claim for damage to his automobile. Thomas is not cooperating with Chloe's attempts to schedule an adjuster to inspect the vehicle. Chloe should Select one: A. Issue a unilateral waiver of rights letter. B. Issue a unilateral reservation of rights letter. C. Issue denial for failure to cooperate. D. Ask Thomas to sign a reservation of rights letter. - answer-B. Issue a unilateral reservation of rights letter. Cathy left a bracelet at a jeweler for repair and was given a receipt with the statement, "This establishment is not responsible for loss or damage to any item left in its possession." Which one of the following does the statement on the receipt represent? Select one: A. Assumption of risk B. Comparative negligence C. A hold harmless agreement D. An exculpatory clause - answer-D. An exculpatory clause Blithe Insurance wanted to enter the Jeweler's Block insurance market and began drafting a new Jeweler's Block policy and insurance application form. Blithe believed it was critical that all insureds under this policy must have a silent alarm system. Because Blithe would not want to write Jeweler's Block insurance for any customer that did not have a silent alarm, Blithe should draft its application and policy so that the customer's application statement about whether it has a silent alarm would be Select one: A. A warranty because an untrue statement would render the policy voidable, even if not material. B. An incontestable clause because the insured could not dispute the truth of the statement. C. A designation because designated matters must be satisfied as a condition of coverage.D. A representation because strict compliance with representations is required. - answer-A. A warranty because an untrue statement would render the policy voidable, even if not material. If the statement is a warranty, if it is untrue, the insurer may deny coverage even if it doesn't involve a material matter. Warranties require strict compliance but representations only require substantial truth. Tommy agreed to mow Heidi's lawn on Wednesday for $35. Tommy then remembered that he had a baseball game on Wednesday. He asked Heidi if it would be okay for his friend, Jeremy, to mow her lawn, and Heidi could just pay the $35 directly to Jeremy. Heidi expressly released Tommy from his obligation. This agreement is known as Select one: A. Contract reformation. B. A novation. C. An accord and satisfaction. D. Substantial performance. - answer-B. A novation. Gabriela is an insurance agent selling a property policy to Oscar. Before the policy was issued, Gabriela assured Oscar that he would not have to add a sprinkler system to the building he was insuring. After coverage was bound, there was a fire in the building and Oscar made a claim for the damages. The insurer denied coverage citing a policy provision that the building be sprinklered. At trial, Gabriela's assurance that sprinklers were not needed was Select one: A. Admissible because her statement created an implied waiver. B. Inadmissible because the insurer's receipt of premium created an implied waiver. C. Admissible because the insurer did not inspect the building before coverage. D. Inadmissible because the parole evidence rule applies. - answer-D. Inadmissible because the parole evidence rule applies. Vladimir and Chin are neighbors and would like to enter into a contract to equally share in the cost to construct a new block wall between their houses. Vladimir contacts a contractor whoprovides a bid and he asks Chin to sign off on it. Chin refuses. Vladimir becomes upset and threatens to sue Chin if he does not sign off. Reluctantly, Chin signs. Is this a voidable contract? Select one: A. Yes, because Vladimir exercised undue influence over Chin who became fearful of Vladimir. B. Yes, because Vladimir's relationship with Chin was such that Chin was compelled to sign. C. No, because all four of the elements of an enforceable contract remain intact. D. No, because threat of a lawsuit is not considered sufficient to deprive Chin of his free will. - answer-D. No, because threat of a lawsuit is not considered sufficient to deprive Chin of his free will. George left his camera at the repair shop to be fixed. An unknown arsonist burned the shop to the ground, destroying George's camera. The fire marshal found no fault with any of the repair shop's fire protection practices and systems. Under the circumstances, Select one: A. The bailee is not responsible for the destruction of the camera. B. The bailee and bailor are equally at fault for the destruction of the camera. C. The bailee is responsible for the destruction of the camera. D. The bailor is at fault for the destruction of the camera. - answer-A. The bailee is not responsible for the destruction of the camera. A restaurant manager created a new method to cook French fries. Which one of the following describes how the restaurant manager can protect his intellectual property rights? Select one: A. By registering a trade secret with the state. B. By claiming part ownership in the restaurant C. By obtaining a patent D. By filing a copyright notice - answer-C. By obtaining a patent. The restaurant manager can protect his intellectual property rights by obtaining a patent. A patent applies to a new, useful, nonobvious invention.Which one of the following presents the two central elements that can give rise to an estoppel? Select one: A. Knowledge and intentional relinquishment of a known right B. Reliance and detriment C. Incorrect statement of facts and intent D. Voluntary choice and inconsistent rights or privileges - answer-B. Reliance and detriment If Zelda agrees to paint Amy's fingernails for $15 twice a month, Zelda and Amy have formed Select one: A. A unilateral contract. B. An implied-in-law contract. C. An irrevocable contract. D. A bilateral contract. - answer-D. A bilateral contract.