CPCU 530 - A2 Practice
Questions and Complete
Solutions Graded A+
Which one of the following contract types requires each party to perform?
Select one:
A. Bilateral
B. Implied
C. Mutual
D. Unilateral - Answer: A. Bilateral
Public policy requires that the insured have an insurable interest in any property or life to be covered by
the policy. A person has an insurable interest in property if its destruction would cause direct monetary
loss. In order to be covered, this insurable interest must exist
Select one:
A. Prior to the loss.
B. When the loss is reported.
C. At the time of loss.
D. When the property is acquired. - Answer: C. At the time of loss.
The type of contract that has not been completely performed by one or both of the parties is
Select one:
A. An executory contract.
B. An implied-in-law contract.
C. An implied-in-fact contract.
D. A voidable contract. - Answer: A. An executory contract.
,A contract is made between two parties for delivery of goods. The goods are delivered and the receiving
party pays for them. Which one of the following terms describes the contract?
Select one:
A. Exacted
B. Executed
C. Completed
D. Executory - Answer: B. Executed
Doug owned a restaurant in Iowa. It is illegal to conduct any type of gambling activity in Iowa. However,
business was slow and Doug replaced his restaurant furniture and fixtures with slot machines and poker
tables. Doug enters into several contracts. Which one of the following is an example of a contract with a
legal purpose?
Select one:
A. A contract for life insurance on Doug's life for death by accident.
B. A contract for property insurance insuring Doug's building entered into after Doug intentionally
burned down the building.
C. A contract for business income insurance covering any interruption in Doug's new business from a
covered peril.
D. A contract for property insurance insuring Doug's slot machines. - Answer: A. A contract for life
insurance on Doug's life for death by accident.
Which one of the following is a circumstance that is likely to make an exculpatory clause in a contract
unenforceable?
Select one:
A. When one party is a charitable organization
B. When the complaining party has a bargaining disadvantage
C. When it is associated with an existing obligation
, D. When it is part of a requirements contract - Answer: B. When the complaining party has a bargaining
disadvantage
Mr. Jones promises to pay his neighbor Alex $25 if he mows his lawn. Which one of the following types
of contract was created?
Select one:
A. Unilateral contract
B. Bilateral contract
C. Sale on approval contract
D. Express contract - Answer: A. Unilateral contract
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 correctly describes whether Merve
must do anything before Lending Back can enforce a new promise by Merve to pay this debt and make
payments once again on this contract?
Select one:
A. Merve need provide no additional consideration.
B. Merve must make no additional promises to pay.
C. Merve must acknowledge the debt.
D. Merve must pay additional consideration. - Answer: A. Merve need provide no additional
consideration.
Neighbors Jack and Jerry were visiting and discussing the cost of new vehicles. Jack told Jerry he wanted
to buy a $26,000 car but to do so he would have to sell his current auto for $8,000. Jerry said, "I accept
your offer." The contract between Jack and Jerry is
Select one:
A. Valid because of Jack's intent to sell and Jerry's acceptance of Jack's offer.
B. Not valid because a general statement that contains no intent to be immediately bound is not an
offer.
Questions and Complete
Solutions Graded A+
Which one of the following contract types requires each party to perform?
Select one:
A. Bilateral
B. Implied
C. Mutual
D. Unilateral - Answer: A. Bilateral
Public policy requires that the insured have an insurable interest in any property or life to be covered by
the policy. A person has an insurable interest in property if its destruction would cause direct monetary
loss. In order to be covered, this insurable interest must exist
Select one:
A. Prior to the loss.
B. When the loss is reported.
C. At the time of loss.
D. When the property is acquired. - Answer: C. At the time of loss.
The type of contract that has not been completely performed by one or both of the parties is
Select one:
A. An executory contract.
B. An implied-in-law contract.
C. An implied-in-fact contract.
D. A voidable contract. - Answer: A. An executory contract.
,A contract is made between two parties for delivery of goods. The goods are delivered and the receiving
party pays for them. Which one of the following terms describes the contract?
Select one:
A. Exacted
B. Executed
C. Completed
D. Executory - Answer: B. Executed
Doug owned a restaurant in Iowa. It is illegal to conduct any type of gambling activity in Iowa. However,
business was slow and Doug replaced his restaurant furniture and fixtures with slot machines and poker
tables. Doug enters into several contracts. Which one of the following is an example of a contract with a
legal purpose?
Select one:
A. A contract for life insurance on Doug's life for death by accident.
B. A contract for property insurance insuring Doug's building entered into after Doug intentionally
burned down the building.
C. A contract for business income insurance covering any interruption in Doug's new business from a
covered peril.
D. A contract for property insurance insuring Doug's slot machines. - Answer: A. A contract for life
insurance on Doug's life for death by accident.
Which one of the following is a circumstance that is likely to make an exculpatory clause in a contract
unenforceable?
Select one:
A. When one party is a charitable organization
B. When the complaining party has a bargaining disadvantage
C. When it is associated with an existing obligation
, D. When it is part of a requirements contract - Answer: B. When the complaining party has a bargaining
disadvantage
Mr. Jones promises to pay his neighbor Alex $25 if he mows his lawn. Which one of the following types
of contract was created?
Select one:
A. Unilateral contract
B. Bilateral contract
C. Sale on approval contract
D. Express contract - Answer: A. Unilateral contract
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 correctly describes whether Merve
must do anything before Lending Back can enforce a new promise by Merve to pay this debt and make
payments once again on this contract?
Select one:
A. Merve need provide no additional consideration.
B. Merve must make no additional promises to pay.
C. Merve must acknowledge the debt.
D. Merve must pay additional consideration. - Answer: A. Merve need provide no additional
consideration.
Neighbors Jack and Jerry were visiting and discussing the cost of new vehicles. Jack told Jerry he wanted
to buy a $26,000 car but to do so he would have to sell his current auto for $8,000. Jerry said, "I accept
your offer." The contract between Jack and Jerry is
Select one:
A. Valid because of Jack's intent to sell and Jerry's acceptance of Jack's offer.
B. Not valid because a general statement that contains no intent to be immediately bound is not an
offer.
