CPCU 530 TEST QUESTIONS AND
ANSWERS ALL CORRECT
Which one of the following correctly describes a bailee's right to limit liability for the
bailed goods in the bailment contract? - Answer-A bailee has a right to limit liability only
for ordinary negligence, not for willful or wanton misconduct.
Bart agreed to sell property to Paula with a stipulation that he would not transfer title to
the property until Paula had paid at least 90 percent of the purchase price. There was
also an option to enter into a standard mortgage arrangement for the remaining 10
percent. This arrangement is typical of - Answer-A land contract
A complete contract of sale for real property usually includes which one of the following
elements? - Answer-Nonessential terms
The Merve's recently had their house covered with vinyl siding. As a means of obtaining
property, this is an example of - Answer-Accession
Benjamin owned a house which was rented by Katie. Benjamin rerouted the gutters and
downspouts to trickle water into the road rather than on the porch. In the winter the
water froze and created a nearly invisible sheet of ice on the road. Can Benjamin and/or
Katie be held responsible if someone is injured on the ice? - Answer-Yes. Benjamin
created a nuisance, and he can be liable for discharging water on the road, but Katie is
not.
Strict liability continues to apply in - Answer-Certain situations involving animals
Under the foreseeability rule, can a defendant be liable for harm that the defendant did
not foresee? - Answer-Yes, the foreseeability rule permits liability where a reasonable
person would have foreseen the outcome, even if the defendant did not
Oscar owned an upscale hotel located near a busy highway. During a hailstorm, Patrick
asked Oscar for a room, but Oscar turned him away because Patrick could not afford
Oscar's prices. Patrick slept in his car on the side of the road. The hail did
approximately $3,000 in damages to his car, and Patrick was robbed of about $4,500 in
cash and other belongings. Which one of the following statements is true? - Answer-
Patrick does not have a viable negligence claim against Oscar because Oscar had no
legal duty to protect Patrick, who was not a guest at his hotel, either from the weather or
from theft.
, All of the following are either complete or partial defenses in a products liability lawsuit,
EXCEPT: - Answer-Breach of warranty
A homeowner added an aboveground swimming pool and a slide to his unfenced
backyard. Worried that this pool might attract nosy neighbors, the homeowner posted
several 'No Trespassing' signs. Which one of the following best describes the liability
that the homeowner would face if a child trespassed onto the property and was injured
by the pool? - Answer-Under the attractive nuisance doctrine, the homeowner can be
liable for injuries to trespassing children caused by his unsafe pool
Colson makes knives and swords as a hobby selling his products on a non-advertised
basis. He does not package his products but does provide a warranty against defects. If
a parent whose child is injured by one of Colson's ever-sharp knives sues Colson under
strict liability, which one of the following statements may be true? - Answer-Colson
would be strictly liable only if the knife was unreasonably dangerous in normal use
The elements of negligence are - Answer-A duty owed by the defendant to the plaintiff,
a breach of the duty, proximate cause, and injury
Under conversion, the party must be deprived of the possession of chattel by which one
of the following actions? - Answer-Wrongful detention
Aaron has to be out of the country for several weeks and hires Louis to mow his grass
during his absence. Aaron tells Louis that he has permission to use his riding mower to
do the work. Which one of the following is Louis' employment status with Aaron? -
Answer-Louis is an independent contractor because Aaron will exercise no control over
how or when the job will be done.
Which one of the following is a duty an agent generally owes to a principal? - Answer-
Accounting
The agency relationship can be terminated in a variety of ways. Which one of the
following is the most common means of terminating an agency relationship? - Answer-
By the parties' contract of expression
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her
in his cellar and demands money from Lily's parents to secure her return. The parents
agree to pay and Lily is returned, but Daniel never receives the money. He sues Lily's
parents for breach of contract. Which one of the following explains why Daniel's contract
with Lily's parents is not legally binding? - Answer-It lacks a legal purpose
Maria owns a commercial building and places insurance with Bastion Insurance.
Because the annual premium is high, and cash is tight, Maria decides to enter into a
premium finance agreement with Finance Co. ("Finance"). Under the premium finance
agreement, Finance pays Bastion the full annual premium and Maria pays Finance a
monthly amount for the premium, a fee and interest. At the midpoint of the policy year,
ANSWERS ALL CORRECT
Which one of the following correctly describes a bailee's right to limit liability for the
bailed goods in the bailment contract? - Answer-A bailee has a right to limit liability only
for ordinary negligence, not for willful or wanton misconduct.
Bart agreed to sell property to Paula with a stipulation that he would not transfer title to
the property until Paula had paid at least 90 percent of the purchase price. There was
also an option to enter into a standard mortgage arrangement for the remaining 10
percent. This arrangement is typical of - Answer-A land contract
A complete contract of sale for real property usually includes which one of the following
elements? - Answer-Nonessential terms
The Merve's recently had their house covered with vinyl siding. As a means of obtaining
property, this is an example of - Answer-Accession
Benjamin owned a house which was rented by Katie. Benjamin rerouted the gutters and
downspouts to trickle water into the road rather than on the porch. In the winter the
water froze and created a nearly invisible sheet of ice on the road. Can Benjamin and/or
Katie be held responsible if someone is injured on the ice? - Answer-Yes. Benjamin
created a nuisance, and he can be liable for discharging water on the road, but Katie is
not.
Strict liability continues to apply in - Answer-Certain situations involving animals
Under the foreseeability rule, can a defendant be liable for harm that the defendant did
not foresee? - Answer-Yes, the foreseeability rule permits liability where a reasonable
person would have foreseen the outcome, even if the defendant did not
Oscar owned an upscale hotel located near a busy highway. During a hailstorm, Patrick
asked Oscar for a room, but Oscar turned him away because Patrick could not afford
Oscar's prices. Patrick slept in his car on the side of the road. The hail did
approximately $3,000 in damages to his car, and Patrick was robbed of about $4,500 in
cash and other belongings. Which one of the following statements is true? - Answer-
Patrick does not have a viable negligence claim against Oscar because Oscar had no
legal duty to protect Patrick, who was not a guest at his hotel, either from the weather or
from theft.
, All of the following are either complete or partial defenses in a products liability lawsuit,
EXCEPT: - Answer-Breach of warranty
A homeowner added an aboveground swimming pool and a slide to his unfenced
backyard. Worried that this pool might attract nosy neighbors, the homeowner posted
several 'No Trespassing' signs. Which one of the following best describes the liability
that the homeowner would face if a child trespassed onto the property and was injured
by the pool? - Answer-Under the attractive nuisance doctrine, the homeowner can be
liable for injuries to trespassing children caused by his unsafe pool
Colson makes knives and swords as a hobby selling his products on a non-advertised
basis. He does not package his products but does provide a warranty against defects. If
a parent whose child is injured by one of Colson's ever-sharp knives sues Colson under
strict liability, which one of the following statements may be true? - Answer-Colson
would be strictly liable only if the knife was unreasonably dangerous in normal use
The elements of negligence are - Answer-A duty owed by the defendant to the plaintiff,
a breach of the duty, proximate cause, and injury
Under conversion, the party must be deprived of the possession of chattel by which one
of the following actions? - Answer-Wrongful detention
Aaron has to be out of the country for several weeks and hires Louis to mow his grass
during his absence. Aaron tells Louis that he has permission to use his riding mower to
do the work. Which one of the following is Louis' employment status with Aaron? -
Answer-Louis is an independent contractor because Aaron will exercise no control over
how or when the job will be done.
Which one of the following is a duty an agent generally owes to a principal? - Answer-
Accounting
The agency relationship can be terminated in a variety of ways. Which one of the
following is the most common means of terminating an agency relationship? - Answer-
By the parties' contract of expression
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her
in his cellar and demands money from Lily's parents to secure her return. The parents
agree to pay and Lily is returned, but Daniel never receives the money. He sues Lily's
parents for breach of contract. Which one of the following explains why Daniel's contract
with Lily's parents is not legally binding? - Answer-It lacks a legal purpose
Maria owns a commercial building and places insurance with Bastion Insurance.
Because the annual premium is high, and cash is tight, Maria decides to enter into a
premium finance agreement with Finance Co. ("Finance"). Under the premium finance
agreement, Finance pays Bastion the full annual premium and Maria pays Finance a
monthly amount for the premium, a fee and interest. At the midpoint of the policy year,
