CPCU 530 QUESTIONS AND ANSWERS
Which one of the following best explains how a successful litigant enforces an
arbitration award?
Select one:
A. The winning party can take the arbitrator's award directly to a sheriff to mandate
compliance with the decision.
B. An arbitrator cannot award money, but the decision can be used as persuasive
evidence in a real court.
C. An arbitrator's award is filed with the appropriate court and is as enforceable as any
court judgment.
D. The parties participating in the arbitration agree in a contract to comply with the
arbitrator's decision. - Answers :C. An arbitrator's award is filed with the appropriate
court and is as enforceable as any court judgment.
Ralph is the director of a fraternal organization that is a not-for-profit association. Ralph
volunteers his time to manage the organization, and he is not paid a salary nor does he
receive any type of non-monetary compensation. Which one of the following statements
regarding Ralph's role as director of the fraternal association is true?
Select one:
A. Since Ralph receives no compensation, his standard of care owed to the association
is less than that of a compensated corporate director.
B. Ralph, as a member of the fraternal association, has no property rights in the
association's assets.
C. As an association director, Ralph has legal rights and duties that differ from those of
a corporate director.
D. Ralph cannot be sued by a member of the association but the fraternal association
itself may be sued by a member who has suffered damage. - Answers :A. Since Ralph
receives no compensation, his standard of care owed to the association is less than that
of a compensated corporate director.
To perfect a security interest in a negotiable instrument, one should
Select one:
A. Take actual possession of the instrument.
B. Create a document of constructive notice.
C. Negotiate a termination statement with the debtor.
D. File a finance statement in the proper county office. - Answers :A. Take actual
possession of the instrument.
Transferring actual possession is the only way to perfect a security interest in a
negotiable instrument, such as a bearer bond, because delivery transfers ownership
In bailments for mutual benefit, the bailee can use the property
Select one:
,A. Only as specified within the bailment agreement or contract.
B. In any way that has reasonably been contemplated by the bailor.
C. In any way that is necessary to accomplish the mutual goal, as long as the bailee
uses reasonable care.
D. Only to the extent necessary to preserve and protect it. - Answers :A. Only as
specified within the bailment agreement or contract.
In bailments for mutual benefit, the bailee can use the property only as specified within
the bailment agreement or contract. For ex., a person who leases a car can use it only
according to the lease agreement's terms.
Anna is the lawyer for the plaintiff in a jury trial. She is preparing her opening statement.
Which one of the following correctly describes what Anna should do during her opening
statement?
Select one:
A. During her opening statement, Anna should instruct the jury about any applicable
laws.
B. During her opening statement, Anna should present a summary of what she expects
to prove.
C. During her opening statement, Anna should challenge the testimony and evidence of
the defendant.
D. During her opening statement, Anna present a summary of all of the evidence that
she plans to present. - Answers :B. During her opening statement, Anna should present
a summary of what she expects to prove.
During her opening statement, Anna should present a summary of what she expects to
prove. She should summarize the evidence during her closing statement.
A complete contract of sale for real property usually includes which one of the following
elements?
Select one:
A. Oral agreement
B. Warranty deed
C. Nonessential terms
D. Definition of conditions - Answers :C. Nonessential terms
Certain terms are nonessential but are usually covered in a complete contract of sale,
such as time of closing and payment terms.
Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy
was a car loan financed by Lending Bank for $8,000. Which one of the following must
Merve do to enforce a new promise to pay this debt and make payments once again on
this contract?
Select one:
A. She must acknowledge the debt.
B. No additional consideration is required.
,C. She must make no additional promises to pay.
D. She must pay additional consideration. - Answers :B. No additional consideration is
required.
A new promise to pay a debt barred by bankruptcy is enforceable without any additional
consideration.
In a class action lawsuit involving an insurer's claim practices, the court must consider
the elements of
Select one:
A. Functionality, commonality, adequacy of representation, and number of plaintiffs.
B. Numerosity, commonality, typicality, and adequacy of representation.
C. Extent of harm, numerosity, commonality, and venue of plaintiffs.
D. Intentionality, commonality, extent of harm, and venue of the defendant. - Answers
:B. Numerosity, commonality, typicality, and adequacy of representation.
In this type of a class action the court must consider the elements of numerosity,
commonality, typicality, and adequacy of representation. The named parties must fairly
and adequately protect the interests of unnamed class members.
Jessica operates her architectural business out of her home. She obtains her business
and personal insurance through Glaston Insurance Agency (GIA). Daniel, the agent at
GIA, neglected to tell Jessica that professional liability coverage was excluded when
she purchased the coverage for her business. When the deck on her house collapses,
Lily files a suit against Jessica's architectural business. It is soon discovered that
Jessica's coverage from GIA does not include professional liability coverage, and that
Jessica does not have adequate funds to compensate Lily. Lily decides to file a suit
against Daniel. Which one of the following statements is correct regarding Lily's right to
sue Daniel?
Select one:
A. Because the circumstances involve professional liability exposures, most courts will
interpret that Lily, as a third party, has the right to sue Daniel.
B. Lily, as a third party, has the right to sue Daniel for hi - Answers :C. Lily was not a
party to the Daniel and Jessica's producer-customer relationship, and therefore has no
rights under the contract.
The Jet Hotel had an old, dangerous boiler in the basement that was rarely used. The
Occupational Health and Safety Administration (OSHA) had no safety standards for this
particular boiler, but did have standards for similar pieces of equipment. The Jet Hotel's
management took no steps to make the boiler safe. One day, the boiler exploded. No
one was seriously hurt, but nine employees were treated with first aid. The management
did not record these injuries or report the accident to OSHA. Which one of the following
OSHA requirements or standards has the management violated?
Select one:
A. The general duty clause
B. The reporting requirement
, C. The recordkeeping requirement
D. The specific safety standard for boilers - Answers :A. The general duty clause
Which one of the following is a necessary element for a document to be considered a
title under Uniform Commercial Code (UCC) Article 7?
Select one:
A. The document gives the holder the right to receive, hold, and dispose of both the
goods and the document of title itself.
B. The document is a contract to ship, store, or dispose of goods.
C. The document is negotiable.
D. The document is created by the bailee as a receipt for goods received. - Answers :D.
The document is created by the bailee as a receipt for goods received.
Justine contracted to create Charlotte's wedding gown by next June. Later, Justine and
Charlotte agreed that Tammy would make the gown, and Charlotte expressly released
Justine from the original contract. Which one of the following statements is true?
Select one:
A. There was a discharge by performance.
B. There was a personal satisfaction contract.
C. There was an agreement to rescind.
D. There was substantial performance of a contract. - Answers :C. There was an
agreement to rescind.
Physician Betty administered medical services to stroke victim Karl who was
unconscious. She provided medication and direction and followed all procedures. When
Karl woke up, he refused other medical services and he also indicated that he could not
be held liable for any expenses that he did not personally authorize or to which he did
not consent. It is likely that Karl might be required to pay the reasonable value of the
services received based on
Select one:
A. A unilateral contract.
B. An implied-in-law contract.
C. An executory contract.
D. An implied-in-fact contract. - Answers :B. An implied-in-law contract.
This is typical of an implied-in-law contract and not of an implied-in-fact, unilateral, or
executory contract. If a doctor renders professional services to an unconscious person
then the law might obligate the patient to pay for those services based on an implied-in-
law contract, to avoid unjust enrichment.
Which one of the following most accurately describes the ability of an offeror to revoke
an offer made to an individual offeree?
Select one:
A. An offeror can revoke an offer any time before acceptance, but must do so through
the same means of communication used in making the original offer.
Which one of the following best explains how a successful litigant enforces an
arbitration award?
Select one:
A. The winning party can take the arbitrator's award directly to a sheriff to mandate
compliance with the decision.
B. An arbitrator cannot award money, but the decision can be used as persuasive
evidence in a real court.
C. An arbitrator's award is filed with the appropriate court and is as enforceable as any
court judgment.
D. The parties participating in the arbitration agree in a contract to comply with the
arbitrator's decision. - Answers :C. An arbitrator's award is filed with the appropriate
court and is as enforceable as any court judgment.
Ralph is the director of a fraternal organization that is a not-for-profit association. Ralph
volunteers his time to manage the organization, and he is not paid a salary nor does he
receive any type of non-monetary compensation. Which one of the following statements
regarding Ralph's role as director of the fraternal association is true?
Select one:
A. Since Ralph receives no compensation, his standard of care owed to the association
is less than that of a compensated corporate director.
B. Ralph, as a member of the fraternal association, has no property rights in the
association's assets.
C. As an association director, Ralph has legal rights and duties that differ from those of
a corporate director.
D. Ralph cannot be sued by a member of the association but the fraternal association
itself may be sued by a member who has suffered damage. - Answers :A. Since Ralph
receives no compensation, his standard of care owed to the association is less than that
of a compensated corporate director.
To perfect a security interest in a negotiable instrument, one should
Select one:
A. Take actual possession of the instrument.
B. Create a document of constructive notice.
C. Negotiate a termination statement with the debtor.
D. File a finance statement in the proper county office. - Answers :A. Take actual
possession of the instrument.
Transferring actual possession is the only way to perfect a security interest in a
negotiable instrument, such as a bearer bond, because delivery transfers ownership
In bailments for mutual benefit, the bailee can use the property
Select one:
,A. Only as specified within the bailment agreement or contract.
B. In any way that has reasonably been contemplated by the bailor.
C. In any way that is necessary to accomplish the mutual goal, as long as the bailee
uses reasonable care.
D. Only to the extent necessary to preserve and protect it. - Answers :A. Only as
specified within the bailment agreement or contract.
In bailments for mutual benefit, the bailee can use the property only as specified within
the bailment agreement or contract. For ex., a person who leases a car can use it only
according to the lease agreement's terms.
Anna is the lawyer for the plaintiff in a jury trial. She is preparing her opening statement.
Which one of the following correctly describes what Anna should do during her opening
statement?
Select one:
A. During her opening statement, Anna should instruct the jury about any applicable
laws.
B. During her opening statement, Anna should present a summary of what she expects
to prove.
C. During her opening statement, Anna should challenge the testimony and evidence of
the defendant.
D. During her opening statement, Anna present a summary of all of the evidence that
she plans to present. - Answers :B. During her opening statement, Anna should present
a summary of what she expects to prove.
During her opening statement, Anna should present a summary of what she expects to
prove. She should summarize the evidence during her closing statement.
A complete contract of sale for real property usually includes which one of the following
elements?
Select one:
A. Oral agreement
B. Warranty deed
C. Nonessential terms
D. Definition of conditions - Answers :C. Nonessential terms
Certain terms are nonessential but are usually covered in a complete contract of sale,
such as time of closing and payment terms.
Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy
was a car loan financed by Lending Bank for $8,000. Which one of the following must
Merve do to enforce a new promise to pay this debt and make payments once again on
this contract?
Select one:
A. She must acknowledge the debt.
B. No additional consideration is required.
,C. She must make no additional promises to pay.
D. She must pay additional consideration. - Answers :B. No additional consideration is
required.
A new promise to pay a debt barred by bankruptcy is enforceable without any additional
consideration.
In a class action lawsuit involving an insurer's claim practices, the court must consider
the elements of
Select one:
A. Functionality, commonality, adequacy of representation, and number of plaintiffs.
B. Numerosity, commonality, typicality, and adequacy of representation.
C. Extent of harm, numerosity, commonality, and venue of plaintiffs.
D. Intentionality, commonality, extent of harm, and venue of the defendant. - Answers
:B. Numerosity, commonality, typicality, and adequacy of representation.
In this type of a class action the court must consider the elements of numerosity,
commonality, typicality, and adequacy of representation. The named parties must fairly
and adequately protect the interests of unnamed class members.
Jessica operates her architectural business out of her home. She obtains her business
and personal insurance through Glaston Insurance Agency (GIA). Daniel, the agent at
GIA, neglected to tell Jessica that professional liability coverage was excluded when
she purchased the coverage for her business. When the deck on her house collapses,
Lily files a suit against Jessica's architectural business. It is soon discovered that
Jessica's coverage from GIA does not include professional liability coverage, and that
Jessica does not have adequate funds to compensate Lily. Lily decides to file a suit
against Daniel. Which one of the following statements is correct regarding Lily's right to
sue Daniel?
Select one:
A. Because the circumstances involve professional liability exposures, most courts will
interpret that Lily, as a third party, has the right to sue Daniel.
B. Lily, as a third party, has the right to sue Daniel for hi - Answers :C. Lily was not a
party to the Daniel and Jessica's producer-customer relationship, and therefore has no
rights under the contract.
The Jet Hotel had an old, dangerous boiler in the basement that was rarely used. The
Occupational Health and Safety Administration (OSHA) had no safety standards for this
particular boiler, but did have standards for similar pieces of equipment. The Jet Hotel's
management took no steps to make the boiler safe. One day, the boiler exploded. No
one was seriously hurt, but nine employees were treated with first aid. The management
did not record these injuries or report the accident to OSHA. Which one of the following
OSHA requirements or standards has the management violated?
Select one:
A. The general duty clause
B. The reporting requirement
, C. The recordkeeping requirement
D. The specific safety standard for boilers - Answers :A. The general duty clause
Which one of the following is a necessary element for a document to be considered a
title under Uniform Commercial Code (UCC) Article 7?
Select one:
A. The document gives the holder the right to receive, hold, and dispose of both the
goods and the document of title itself.
B. The document is a contract to ship, store, or dispose of goods.
C. The document is negotiable.
D. The document is created by the bailee as a receipt for goods received. - Answers :D.
The document is created by the bailee as a receipt for goods received.
Justine contracted to create Charlotte's wedding gown by next June. Later, Justine and
Charlotte agreed that Tammy would make the gown, and Charlotte expressly released
Justine from the original contract. Which one of the following statements is true?
Select one:
A. There was a discharge by performance.
B. There was a personal satisfaction contract.
C. There was an agreement to rescind.
D. There was substantial performance of a contract. - Answers :C. There was an
agreement to rescind.
Physician Betty administered medical services to stroke victim Karl who was
unconscious. She provided medication and direction and followed all procedures. When
Karl woke up, he refused other medical services and he also indicated that he could not
be held liable for any expenses that he did not personally authorize or to which he did
not consent. It is likely that Karl might be required to pay the reasonable value of the
services received based on
Select one:
A. A unilateral contract.
B. An implied-in-law contract.
C. An executory contract.
D. An implied-in-fact contract. - Answers :B. An implied-in-law contract.
This is typical of an implied-in-law contract and not of an implied-in-fact, unilateral, or
executory contract. If a doctor renders professional services to an unconscious person
then the law might obligate the patient to pay for those services based on an implied-in-
law contract, to avoid unjust enrichment.
Which one of the following most accurately describes the ability of an offeror to revoke
an offer made to an individual offeree?
Select one:
A. An offeror can revoke an offer any time before acceptance, but must do so through
the same means of communication used in making the original offer.
