CPCU 530: MULTIPLE CHOICE
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more
drinks than Georgia and is stumbling and slurring his speech. Sensing an opportunity,
Georgia proposes that Diego sell her his expensive Swiss wristwatch for a mere $100
and Diego agrees. The next day, Georgia appears at Diego's office with $100 asking for
the wristwatch. Which one of the following arguments is best for Diego to avoid the
contract? - Diego lacked capacity to enter into a contract because he was inebriated.
Larissa has a property policy covering her auto repair shop. The shop is totally
destroyed by a fire. The process of determining whether and to what extent this specific
loss is covered under Larissa's property policy is known as - Policy analysis.
Georgia applied for a homeowner policy with Insurance Company (IC). IC's application
asked if Georgia's home had an alarm system and Georgia answered that it did. IC
issued the policy to Georgia. Two months later, burglars entered Georgia's house and
stole several personal property items. At that time, IC discovered that Georgia's home
did not have an alarm system. If Georgia's application statement about the alarm were
determined to be a warranty - IC could avoid Georgia's policy, whether or not the
statement was material.
Which one of the following statements correctly states the effect of consideration on
whether waivers are binding underinsurance law? - Some waivers are binding without
consideration
Oliver contacted his insurance agent Maria about homeowners insurance. Oliver said: "I
want homeowners insurance." Maria responded: "You got it." Which one of the following
is the best statement of why no agreement to provide insurance was likely reached by
the parties? - The agreement was not sufficiently specific on key terms.
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC).
Cian obtained a homeowner policy from Melfor Insurance--containing a standard
mortgage clause--which covered the house for damage due to windstorm. A windstorm
destroyed Cian's house three years later. Which one of the following correctly states
who is entitled to the proceeds payable under Cian's homeowners policy? - KMC, as its
interests appear.
An insurance contract is often said to be a contract of adhesion. Which one of the
following is the basis of this characteristic of insurance contracts? - The insurer writes
the insurance policy so the insured must "take or leave" the policy.
Ida desperately needed to purchase homeowners insurance on her newly purchased
dwelling. When she talked with Grace, an agent with Jancy's Insurance Company, Ida
lied on the application when she denied having previous total fire losses. She also told
Grace she had not had any previous total fire losses. Ida had recently been declined by
,three other companies for having previous total fire losses that were caused by physical
hazards under Ida's control. The type of behavior that Ida has exhibited is called -
Concealment.
Which one of the following is an element that must be present for a reservation of rights
notice to be effective? - The notice must inform the insured fairly of the insurer's
position.
Donative intent is one of the elements of a gift. Which one of the following describes
donative intent? - An intent to make a gift in the present
Hadley, Gary and Ike have a joint tenancy on a $200,000 property. If Gary dies, Hadley
and Ike - Will receive and equally share Gary's portion of the property.
Carlton opted to use a trust deed to purchase a 100-unit apartment building. This
allowed up to 100 bondholders to be involved in the process. When Carlton pays off his
trust deed on the apartment building, the trustee - Must be certain that all bondholders
are paid.
After buying a 30-acre tract of land, Jerry registered the property deed in a local
government office. The purpose of recording or registering his deed was to - Give notice
to the world that the transfer of real property had occurred.
Act that constitute invasion of the right of privacy include - Torts that involve use or
disclosure of information.
Fernanda runs a warehouse in New Jersey. The business is successful because it has
major highway access and is close to major consumer markets. Manufacturers from
around the country store goods bound for Northeastern customers at Fernanda's
warehouse. Given the large amount of goods stored by others in her warehouse,
Fernanda is concerned about her exposure if something happens to the warehouse or
the goods, so she seeks advice from a lawyer about how to limit her exposure to loss.
Which one of the following best describes Fernanda's options in addressing this
liability? - UCC Article 7 permits Fernanda to limit her liability through terms in the
warehouse receipt.
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,
which one of the following best describes Maria's premium finance agreement with
Finance? - A bilateral contract
Erin has worked full-time for the last five years as a librarian for a law firm with 100
attorneys located in a large downtown office building. Erin and her husband are happy
,to announce that Erin is expecting a baby in six months. She inquires with the law firm's
human resources department about her rights for parental leave under the Family
Medical Leave Act (FMLA). Which one of the following best describes what the law firm
must offer Erin under the FMLA? - The law firm must offer Erin up to 12 weeks of
unpaid leave in a 12-month period, with no loss of accrued employment benefits.
In February, Ann contract with Mahdi to deliver clean garden top soil for $30 a cubic
yard to Mahdi's farm in Pennsylvania. No time for delivery is stated in their contract but
the parties understand that Mahdi wants to use the soil for this year's planting season.
In March, Ann delivers garden soil that is contaminated and Mahdi refuses to pay
because he believes Ann breached their agreement. Which one of the following best
describes how a court would rule on Mahdi's claim that Ann breached their agreement?
- The court would find for Mahdi because Ann's goods are non-conforming.
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? - It lacks a legal purpose.
Vincente applied for business insurance with Hallbinger Insurance. Hallbinger's
application asked if Vincente had any prior "serious accidents or losses." Vincente had
a small water loss five years ago, but believing it wasn't serious, he answered "no."
Hallbinger issued the policy. If Hallbinger subsequently discovers Vincente's prior water
loss, Hallbinger should - Do nothing because Vincente's statement was not a material
misrepresentation.
Mustafa met with his insurance agent Lucy to obtain a business owners policy, Lucy
helped Mustafa complete an application and sent the signed application along with
Mustafa's premium check to Delmond Insurance Co. Delmond never responded to
Mustafa. Ninety days later, Mustafa had a loss to his business that would have been
covered by the Delmond policy. If Mustafa files suit against Delmond to receive
compensation for his loss, - Mustafa will win, if Delmond's delay on his application was
unreasonable.
Lucy rented an apartment to Daniel. The wiring in Daniel's apartment was faulty, and
certain light switches, if operated with wet hands, could give off nasty electric shocks.
Lucy knew about this condition, but did not tell Daniel about the light switches. Daniel
suffered minor burns from a light switch. Which one of the following correctly identifies
whether Lucy is liable for Daniel's injuries, at common law and under today's law? - Not
liable at common law, liable under today's law
Generally, how do courts determine that a defendant is liable under negligence per se?
- Courts determine that a defendant is negligent per se when the defendant has violated
a statutory standard.
, What distinguishes toxic torts from other types of torts? - Liability for toxic torts is
generally established by statute rather than by common law.
Manufacturer Tyler was in the welding business. Tyler tried to save money by
"enhancing" the solder with a inferior product as well as thinning the welds. These
practices led to defective welds which resulted in a collapse of the welds inflicting bodily
injury on an individual. In a negligence case against Tyler, a plaintiff must prove that
Tyler - Failed to use reasonable care.
Joey purchased a "two-and-a-half ton capacity" trailer for the purpose of hauling junk
metal for a fee. When a two-ton load of metal caused the trailer frame to twist under the
load, Joey sued the manufacturer. The theory on which to base his lawsuit with the
most likelihood of success is - Misrepresentation
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? - 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.
Negligence lawsuit, the plaintiff has the burden of proving all the elements of
negligence, and the defendant has the burden of proving any - Defense.
Nicolas rented a vacation house to Carolina. Tania visited Carolina and an earthquake
struck the vacation house. Tania was injured by falling debris. Generally, which one of
the following is correct concerning whether Tania has a tort claim against Nicolas or
Carolina? - Tania has no claim because neither the landowner nor the possessor has a
duty to protect the public from natural conditions of the land.
Located in a small midwestern town, Bin's Deli hires youthful workers and pays hourly
wages. None of their employees are member of a protected class. Which one of the
following legal concepts permits Bin's Deli to release any of its employees at any time
for any reason, or no reason? - Employment at will
Miguel seeks to insure his personal auto to comply with state regulations. He contacts
an insurance agent who provides Miguel with a personal auto policy with Atlas Motorist
Insurance Company ("Atlas"). Which one of the following best describes the contractual
relationship between Miguel and Atlas? - An express contract
Tool Corporation has operated successfully for decades, but in recent years stiff price
competition from overseas suppliers and a lack of skilled labor at affordable prices have
made the company unprofitable. Tool Company has incurred substantial debt to keep
the operation running and save jobs, but they can no longer access bank financing. Tool
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more
drinks than Georgia and is stumbling and slurring his speech. Sensing an opportunity,
Georgia proposes that Diego sell her his expensive Swiss wristwatch for a mere $100
and Diego agrees. The next day, Georgia appears at Diego's office with $100 asking for
the wristwatch. Which one of the following arguments is best for Diego to avoid the
contract? - Diego lacked capacity to enter into a contract because he was inebriated.
Larissa has a property policy covering her auto repair shop. The shop is totally
destroyed by a fire. The process of determining whether and to what extent this specific
loss is covered under Larissa's property policy is known as - Policy analysis.
Georgia applied for a homeowner policy with Insurance Company (IC). IC's application
asked if Georgia's home had an alarm system and Georgia answered that it did. IC
issued the policy to Georgia. Two months later, burglars entered Georgia's house and
stole several personal property items. At that time, IC discovered that Georgia's home
did not have an alarm system. If Georgia's application statement about the alarm were
determined to be a warranty - IC could avoid Georgia's policy, whether or not the
statement was material.
Which one of the following statements correctly states the effect of consideration on
whether waivers are binding underinsurance law? - Some waivers are binding without
consideration
Oliver contacted his insurance agent Maria about homeowners insurance. Oliver said: "I
want homeowners insurance." Maria responded: "You got it." Which one of the following
is the best statement of why no agreement to provide insurance was likely reached by
the parties? - The agreement was not sufficiently specific on key terms.
Cian purchased a house with money loaned to him by Keithly Mortgage Co. (KMC).
Cian obtained a homeowner policy from Melfor Insurance--containing a standard
mortgage clause--which covered the house for damage due to windstorm. A windstorm
destroyed Cian's house three years later. Which one of the following correctly states
who is entitled to the proceeds payable under Cian's homeowners policy? - KMC, as its
interests appear.
An insurance contract is often said to be a contract of adhesion. Which one of the
following is the basis of this characteristic of insurance contracts? - The insurer writes
the insurance policy so the insured must "take or leave" the policy.
Ida desperately needed to purchase homeowners insurance on her newly purchased
dwelling. When she talked with Grace, an agent with Jancy's Insurance Company, Ida
lied on the application when she denied having previous total fire losses. She also told
Grace she had not had any previous total fire losses. Ida had recently been declined by
,three other companies for having previous total fire losses that were caused by physical
hazards under Ida's control. The type of behavior that Ida has exhibited is called -
Concealment.
Which one of the following is an element that must be present for a reservation of rights
notice to be effective? - The notice must inform the insured fairly of the insurer's
position.
Donative intent is one of the elements of a gift. Which one of the following describes
donative intent? - An intent to make a gift in the present
Hadley, Gary and Ike have a joint tenancy on a $200,000 property. If Gary dies, Hadley
and Ike - Will receive and equally share Gary's portion of the property.
Carlton opted to use a trust deed to purchase a 100-unit apartment building. This
allowed up to 100 bondholders to be involved in the process. When Carlton pays off his
trust deed on the apartment building, the trustee - Must be certain that all bondholders
are paid.
After buying a 30-acre tract of land, Jerry registered the property deed in a local
government office. The purpose of recording or registering his deed was to - Give notice
to the world that the transfer of real property had occurred.
Act that constitute invasion of the right of privacy include - Torts that involve use or
disclosure of information.
Fernanda runs a warehouse in New Jersey. The business is successful because it has
major highway access and is close to major consumer markets. Manufacturers from
around the country store goods bound for Northeastern customers at Fernanda's
warehouse. Given the large amount of goods stored by others in her warehouse,
Fernanda is concerned about her exposure if something happens to the warehouse or
the goods, so she seeks advice from a lawyer about how to limit her exposure to loss.
Which one of the following best describes Fernanda's options in addressing this
liability? - UCC Article 7 permits Fernanda to limit her liability through terms in the
warehouse receipt.
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,
which one of the following best describes Maria's premium finance agreement with
Finance? - A bilateral contract
Erin has worked full-time for the last five years as a librarian for a law firm with 100
attorneys located in a large downtown office building. Erin and her husband are happy
,to announce that Erin is expecting a baby in six months. She inquires with the law firm's
human resources department about her rights for parental leave under the Family
Medical Leave Act (FMLA). Which one of the following best describes what the law firm
must offer Erin under the FMLA? - The law firm must offer Erin up to 12 weeks of
unpaid leave in a 12-month period, with no loss of accrued employment benefits.
In February, Ann contract with Mahdi to deliver clean garden top soil for $30 a cubic
yard to Mahdi's farm in Pennsylvania. No time for delivery is stated in their contract but
the parties understand that Mahdi wants to use the soil for this year's planting season.
In March, Ann delivers garden soil that is contaminated and Mahdi refuses to pay
because he believes Ann breached their agreement. Which one of the following best
describes how a court would rule on Mahdi's claim that Ann breached their agreement?
- The court would find for Mahdi because Ann's goods are non-conforming.
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? - It lacks a legal purpose.
Vincente applied for business insurance with Hallbinger Insurance. Hallbinger's
application asked if Vincente had any prior "serious accidents or losses." Vincente had
a small water loss five years ago, but believing it wasn't serious, he answered "no."
Hallbinger issued the policy. If Hallbinger subsequently discovers Vincente's prior water
loss, Hallbinger should - Do nothing because Vincente's statement was not a material
misrepresentation.
Mustafa met with his insurance agent Lucy to obtain a business owners policy, Lucy
helped Mustafa complete an application and sent the signed application along with
Mustafa's premium check to Delmond Insurance Co. Delmond never responded to
Mustafa. Ninety days later, Mustafa had a loss to his business that would have been
covered by the Delmond policy. If Mustafa files suit against Delmond to receive
compensation for his loss, - Mustafa will win, if Delmond's delay on his application was
unreasonable.
Lucy rented an apartment to Daniel. The wiring in Daniel's apartment was faulty, and
certain light switches, if operated with wet hands, could give off nasty electric shocks.
Lucy knew about this condition, but did not tell Daniel about the light switches. Daniel
suffered minor burns from a light switch. Which one of the following correctly identifies
whether Lucy is liable for Daniel's injuries, at common law and under today's law? - Not
liable at common law, liable under today's law
Generally, how do courts determine that a defendant is liable under negligence per se?
- Courts determine that a defendant is negligent per se when the defendant has violated
a statutory standard.
, What distinguishes toxic torts from other types of torts? - Liability for toxic torts is
generally established by statute rather than by common law.
Manufacturer Tyler was in the welding business. Tyler tried to save money by
"enhancing" the solder with a inferior product as well as thinning the welds. These
practices led to defective welds which resulted in a collapse of the welds inflicting bodily
injury on an individual. In a negligence case against Tyler, a plaintiff must prove that
Tyler - Failed to use reasonable care.
Joey purchased a "two-and-a-half ton capacity" trailer for the purpose of hauling junk
metal for a fee. When a two-ton load of metal caused the trailer frame to twist under the
load, Joey sued the manufacturer. The theory on which to base his lawsuit with the
most likelihood of success is - Misrepresentation
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? - 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.
Negligence lawsuit, the plaintiff has the burden of proving all the elements of
negligence, and the defendant has the burden of proving any - Defense.
Nicolas rented a vacation house to Carolina. Tania visited Carolina and an earthquake
struck the vacation house. Tania was injured by falling debris. Generally, which one of
the following is correct concerning whether Tania has a tort claim against Nicolas or
Carolina? - Tania has no claim because neither the landowner nor the possessor has a
duty to protect the public from natural conditions of the land.
Located in a small midwestern town, Bin's Deli hires youthful workers and pays hourly
wages. None of their employees are member of a protected class. Which one of the
following legal concepts permits Bin's Deli to release any of its employees at any time
for any reason, or no reason? - Employment at will
Miguel seeks to insure his personal auto to comply with state regulations. He contacts
an insurance agent who provides Miguel with a personal auto policy with Atlas Motorist
Insurance Company ("Atlas"). Which one of the following best describes the contractual
relationship between Miguel and Atlas? - An express contract
Tool Corporation has operated successfully for decades, but in recent years stiff price
competition from overseas suppliers and a lack of skilled labor at affordable prices have
made the company unprofitable. Tool Company has incurred substantial debt to keep
the operation running and save jobs, but they can no longer access bank financing. Tool
