CPCU 530

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.

A. Merve need provide no additional consideration.

Certain elements must be present for a reservation of rights notice or nonwaiver agreement to be effective. Which one of the following is one of these elements? Select one: A. Must communicate the notice by letter to the insured in a timely manner B. Email the notice to the insured as quickly as possible C. Must inform insured in person D. Oral notice to the insured as quickly as possible

A. Must communicate the notice by letter to the insured in a timely manner

If an agency is at will, Select one: A. The agency relationship can be terminated without cause. B. Wrongful termination is a concern. C. Both agent and principal must adhere to the contract. D. Termination for just cause must still be considered.

A. The agency relationship can be terminated without cause.

The type of authority the principal intentionally confers upon the agent or allows the agent to believe the agent possesses is Select one: A. Apparent authority. B. Actual authority. C. Vicarious authority. D. Deferred authority.

B. Actual authority.

A municipality contracts with a large propane gas company to provide sufficient fuel for the town's meat market. A citizen became ill after eating meat that had spoiled when the gas supply was interrupted. The citizen who became ill is best described as Select one: A. A donee beneficiary. B. An incidental beneficiary. C. An intended beneficiary. D. A creditor beneficiary.

B. An incidental beneficiary.

Zach purchased a home through realtor Josephine who arranged a loan with Bank B. Zach will use his new home as security for the bank loan and he has insured the loan with Insurer X. The mortgagee is Select one: A. Zach. B. Bank B. C. Insurer X. D. Josephine.

B. Bank B.

Contracts may be illegal because they are against public policy or because they are contrary to constitutional, statutory, or Select one: A. Interstate law. B. Tort law. C. Case law. D. Criminal law.

C. Case law.

Depending on the offense, a principal can sue an agent Select one: A. In contract for harassment done. B. Under the independent agency statute. C. For breach of agency contract. D. Under the department of insurance statute.

C. For breach of agency contract.

Associations are not subject to which one of the following which are commonly levied on corporations? Select one: A. Assessment fees B. Member fees C. Franchise taxes D. Expense sharing costs

C. Franchise taxes

A homeowners policy is an example of Select one: A. An executory contract B. A personal contract. C. An implied-in-fact contract. D. An implied-in-law contract.

A. An executory contract

When a principal or the agent have both power and the right to terminate the agency at any time without legal liability, the concept is referred to as Select one: A. At will. B. Compromise. C. Joint agreement. D. Satisfaction.

A. At will.

Under the form of cooperative ownership, Company X owns an apartment complex with 50 single family dwelling units. Some apartments have been remodeled and apartments vary in size and accommodations. Which one of the following statements is true? Select one: A. Corporation X holds title to the apartment complex property. B. Corporation X has an equal right to occupy the premises with all other tenants. C. The number of shares in the corporation that each tenant owns must be equal. D. Under cooperative ownership laws, Corporation X is required to issue 50 shares to the tenants which consist of one share per unit.

A. Corporation X holds title to the apartment complex property.

Which one of the following is a situation in which a corporation's current liabilities, as opposed to its total liabilities, exceed its current assets? Select one: A. Insolvency B. Dissolution C. Reorganization D. Liquidation

A. Insolvency

Cheryl owns a house on a city lot. The city enacted a new zoning law requiring greater setbacks, that is, buildings cannot be closer than a prescribed distance from the street or adjoining property lines. Cheryl's house does not comply with the new law. On which one of the following bases could Cheryl be entitled to relief from the new zoning law? Select one: A. Nonconforming use B. Undue hardship C. Special exception D. Spot usage

A. Nonconforming use

Which one of the following determines a corporation's reason for existence and its powers? Select one: A. The corporate charter and bylaws. B. The Commerce Clause of the U.S. Constitution C. The corporation's Board of Directors D. State law

A. The corporate charter and bylaws.

Which one of the following types of agents has the broadest authority of all insurance agents and fully represents an insurer? Select one: A. The general agent B. The special agent C. The insurance broker D. The soliciting agent

A. The general agent

In contract liability cases one of the questions to be answered in determining the parties' liabilities and rights includes Select one: A. What was the extent of the agent's authority? B. Was the agent disclosed? C. Were the damages disclosed? D. Was there liability on part of the agent or principal?

A. What was the extent of the agent's authority?

If an employee suspects that his or her legal rights have been violated by an employer through a wrongful termination, two actions are possible. A breach of contract claim can be made if a contract of employment has been formed between the employer and the employee or Select one: A. The employee may seek restoration through arbitration. B. A legal action can be brought through the courts for specific causes of action. C. The employee may appeal to the National Labor Relations Board for a claim review and a hearing. D. Both the employer and the employee may participate in the mediation process.

B. A legal action can be brought through the courts for specific causes of action.

The Merve's recently had their house covered with vinyl siding. As a means of obtaining property, this is an example of Select one: A. Permanent fixture improvement. B. Accession. C. Added value. D. Improvements and betterments.

B. Accession. Accession is an increase or addition to property. Accession results from a union of two or more items, such as a coat of paint being applied to a house, or from the transformation of raw materials into a finished product, such as wood into barrels. It can also occur naturally, such as when a farm animal gives birth, in which case the animal's owner also owns the offspring.

Usually, the circumstances for termination of the producer/insurer relationship Select one: A. Are established by the National Association of Insurance Commissioners (NAIC). B. Are specified in the agency contract. C. Are set forth in state law. D. Vary from insurer to insurer based on producer conduct and producer standards.

B. Are specified in the agency contract.

At common law, the rule of strict liability generally does not apply to dogs and cats unless the owner Select one: A. Purchased or used the animal for gaming or wagering purposes. B. Knew of the animal's vicious propensity to cause injury. C. Was guilty of negligent entrustment. D. Intended that the animal harm people or property.

B. Knew of the animal's vicious propensity to cause injury.

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 was not a party to the Daniel and Jessica's producer-customer relationship, and therefore has no rights under the contract. C. Lily, as a third party, has the right to sue Daniel for his failure to transmit information properly. D. As a third party, the only way that Lily can sue Daniel is by filing a joint suit with Jessica.

B. Lily was not a party to the Daniel and Jessica's producer-customer relationship, and therefore has no rights under the contract.

An insurance producer who is a soliciting agent has the authority to Select one: A. Bind an insurer to coverage. B. Seek applications for insurance. C. Issue and renew policies. D. Appoint subagents.

B. Seek applications for insurance.

Noncompliance with a warranty concerning one type of covered property will not defeat coverage for another type of property to which the warranty does not relate, because courts generally interpret insurance policies as Select one: A. Valid. B. Severable. C. Contracts of adhesion. D. Incontestable.

B. Severable.

Henri orally agreed to sell Dan a parcel of land for $25,000. Before they could draw up a contract of sale, Dan told Henri he no longer wanted the land because he was going to move out of state with his parents. Which one of the following statements is true? Select one: A. Dan is the grantor in this oral agreement. B. Under the statute of frauds, the contract must be in writing, and therefore Dan cannot be held to the oral agreement. C. Henri is the vendee in this transaction. D. Because there is an oral contract, Henri can enforce the contract against Dan.

B. Under the statute of frauds, the contract must be in writing, and therefore Dan cannot be held to the oral agreement.

Which one of the following is an advantage of a limited liability partnership? Select one: A. A partner's personal liability for acts and omissions of other partners is strict. B. A partner's personal liability for acts and omissions of other partners is based on tort and not contract law. C. A partner's personal liability for acts and omissions of other partners is limited. D. A partner's personal liability for acts and omissions of other partners is based on the role of the enterprise in a particular incident.

C. A partner's personal liability for acts and omissions of other partners is limited.

The Richley Corporation elected to sell all of its assets in return for shares of stock in the Worthley Corporation. By taking this action, the Richley Corporation has completed which one of the following types of mergers? Select one: A. Share exchange B. Tender offer C. De facto merger D. Takeover

C. De facto merger

Aleski bought a house using money loaned to him by Jancy Home Mortgage (JHM). JHM obtained property insurance on Aleski's house but Aleski did not purchase any insurance. Six months later, the house was destroyed by fire. Which one of the following correctly states who is entitled to the proceeds under JHM's property policy? Select one: A. Aleski, because it is a third-party beneficiary of JHM's insurance policy B. Aleski, under the doctrine of equitable conversion C. JHM, because it obtained the insurance for its own benefit D. JHM, under the doctrine of equitable conversion

C. JHM, because it obtained the insurance for its own benefit

A periodic tenancy is a Select one: A. A landlord-tenant estate in which the tenant has permission to occupy a premises as a landlord desires. B. Involves a tenant who has a lease for a number of years and, at the expiration of the lease, continues to occupy the premises. C. Landlord-tenant estate with no fixed termination date and automatic renewal until one of the parties gives notice of intent to terminate. D. A landlord-tenant estate for a definite period.

C. Landlord-tenant estate with no fixed termination date and automatic renewal until one of the parties gives notice of intent to terminate.

Which one of the following statutes enables state citizens to sue in their own state courts people or entities who are not physically present in the state but who have had minimum contacts there? Select one: A. Foreign corporation statute B. Interstate commerce statute C. Long-arm statute D. Sarbanes-Oxley Act

C. Long-arm statute

Morris' Insurance Agency agreed to find surplus liability insurance for Calvin Manufacturing. Morris advised Calvin that an insurer had been located and that coverage was effective immediately. Morris did not inform Calvin of the insurer's identity. Before the policy was issued, Calvin had a claim but the insurer went bankrupt. What liability does Morris have for the claim? Select one: A. Morris may be personally liable because he represented an excess and surplus insurer. B. Morris is unlikely liable if no information was available as to the financial condition of the insurer. C. Morris may be personally liable because he did not investigate the insurer's financial status. D. Morris has no liability because an agent is not responsible for the financial condition of the insurer.

C. Morris may be personally liable because he did not investigate the insurer's financial status.

For an insurer to waive the insured's breach of condition under the insurer's policy, the insurer Select one: A. Need not have any knowledge of the insured or any activity under the insured's policy. B. Must not know of the breach of the condition. C. Must know of the breach of the condition. D. Need not know about the breach of the condition.

C. Must know of the breach of the condition.

Which one of the following is a difference between not-for-profit association directors and corporate directors? Select one: A. Not-for-profit association directors work for profit businesses. B. Not-for-profit association directors have different rights and duties when compared with corporate directors. C. Not-for-profit association directors do not have as high a standard of care as corporate directors. D. Not-for-profit association directors are always compensated.

C. Not-for-profit association directors do not have as high a standard of care as corporate directors.

Which one of the following statements is true regarding foreign corporations? Select one: A. A foreign corporation cannot be a citizen in any state. B. A state can limit interstate commerce of any foreign corporation. C. Foreign corporations must be sued in states where they are physically present. D. A foreign corporation must obtain a certificate of authority.

D. A foreign corporation must obtain a certificate of authority.

The type of contract that has not been completely performed by one or both of the parties is Select one: A. An implied-in-fact contract. B. A voidable contract. C. An implied-in-law contract. D. An executory contract.

D. An executory contract.

Alexis was shot in the eye with a BB gun fired by Henri. Her face was substantially disfigured and scarred from the injuries. Alexis is suing Henri for medical expenses, pain and suffering, emotional distress, and lost wages. If the court denies special damages but awards general damages, Alexis will be paid for her Select one: A. Medical expenses only. B. Pain and suffering only.Is. C. Medical expenses and lost wages. D. Emotional distress as well as pain and suffering.

D. Emotional distress as well as pain and suffering.

Franklin was homeless until he discovered a cottage in the woods and took up residence in it. The cottage owner Deena knew Franklin had been living in the cottage for four years but she intends to sell it. Franklin is claiming he is entitled to live there based on adverse possession. Which one of the following will best reinforce Deena's position and her ownership claim? Select one: A. Franklin's possession must be open and obvious. B. Franklin's possession must have been adverse, and without Deena's permission. C. Franklin must have exclusive possession of the property and occupy it in the usual way, such as living in it. D. Franklin's possession was for a brief time period.

D. Franklin's possession was for a brief time period.

A generally prohibited agreement in which an employer will not engage the products or services of another person currently disputed by a labor union is a Select one: A. Right-to-work agreement. B. Closed shop agreement. C. Bad-faith bargaining agreement. D. Hot-cargo agreement.

D. Hot-cargo agreement.

Which one of the following is a characteristic of an unincorporated association? Select one: A. An association must be formed for profit. B. An association can own realty and execute a lease. C. In an association, expense sharing and profit is per capita. D. Individual members do not participate in management in an association.

D. Individual members do not participate in management in an association.

A producer may have apparent authority when no actual agency relationship exists. In such cases, the law holds that an agency relationship may exist, depending on the conduct of the Select one: A. Non-principal party. B. Insurance applicant and how the applicant perceives the agency relationship. C. Producer. D. Insurer.

D. Insurer. The focus is only on the conduct of the insurer. An insurer might be barred from denying and agency relationship when others were misled into believing an agency relationship existed under the doctrine of apparent authority.

Siblings Ann, Benny, and Catherine concurrently own and have an undivided interest in an estate that will transfer in equal shares to the surviving siblings if one of them dies. If two of them die at the same time, the remaining sibling will receive the entire estate. This form of concurrent ownership is a Select one: A. Life estate. B. Tenancy by the entirety. C. Fee simple estate. D. Joint tenancy.

D. Joint tenancy.

In the landmark case of Rylands v. Fletcher, the court extended the doctrine of strict liability to certain activities on real property. This case arose from the defendant's construction of a water reservoir. The court held the defendant strictly liable for the injury. The decision applies only to Select one: A. Natural land conditions such as swamps, ridges, or gullies. B. Natural causes such as floods, unprecedented rainfall, volcanoes and earthquakes. C. Natural plants such as trees and weeds. D. Things artificially brought onto land.

D. Things artificially brought onto land.

All of the following are intellectual property protections granted by a government entity, EXCEPT: Select one: A. Patents B. Copyrights C. Trade secrets D. Trademarks

C. Trade secrets

Which one of the following statements describes a corporate merger? Select one: A. A corporation's stockholders file for involuntary dissolution proceedings. B. One corporation makes stock share purchase offer to another corporation's stockholders.I C. Two or more corporations join to become another corporation. D. One corporation involuntarily assumes control of another corporation.

C. Two or more corporations join to become another corporation.

A mistake in a contract is a perception that does not agree with the facts. While some mistakes do not affect the parties' rights, others make the agreement voidable or Select one: A. Unreliable. B. Retractable. C. Unenforceable. D. Mistaken.

C. Unenforceable.

An insurance producer's actual authority can be expressed as well as Select one: A. Absolute. B. Induced. C. Deferred. D. Implied.

D. Implied.

Which one of the following is considered a fixture? Select one: A. Wallpaper B. A free standing cabinet owned by a tenant C. A framed painting on canvas hung on a wall D. A door

D. A door

A producer who fails to add an available coverage requested by an insured has failed in which one of the following producer duties? Select one: A. Duty to place insurance with a solvent insurer B. Duty to advise C. Duty to maintain coverage D. Duty to follow instructions

D. Duty to follow instructions

In order to obtain recognition, a new union can file a recognition petition with the National Labor Relations Board and request an election. To request an election, a union must have authorization cards signed by at least Select one: A. 10 percent of the employees. B. 30 percent of the employees C. 50 percent of the employees. D. 51 percent of the employees.

B. 30 percent of the employees

Employees' lawsuits against employers for illegal termination are called Select one: A. Malfeasance actions. B. Wrongful discharge suits. C. Unfair employment practices suits. D. Bad-faith actions.

B. Wrongful discharge suits.

Partnerships can arise from which one of the following? Select one: A. Government approval B. Shareholder's actions as a corporation C. Legal liability actions D. An oral agreement

D. An oral agreement

Heather wants to make a $500 gift to her brother, Will. Heather sells her snowmobile to Walter for $500 and obtains Walter's promise to pay Will the $500 price for the snowmobile. Will is best described as Select one: A. An intended beneficiary. B. A donee beneficiary. C. An incidental beneficiary. D. A creditor beneficiary.

B. A donee beneficiary.

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 Select one: A. Mortgaged property. B. A land contract. C. A life estate sale. D. An indentured trust.

B. A land contract.

Which one of the following is true regarding a void contract? Select one: A. A void contract is a contract in which the parties can execute it completely unless an innocent party chooses to avoid it. B. A void contract is not legally enforceable or binding. C. A contract with a minor is always a void contract. D. A void contract is entered into under fraud or duress.

B. A void contract is not legally enforceable or binding.

When Adam went to work for Stulford's Coffee Shop, he was given written instructions on how to brew its coffee including how much coffee and water to use in the coffee makers. The authority demonstrated here was Select one: A. Implied authority. B. Express authority. C. Apparent authority. D. Procedural authority.

B. Express authority.

Under the foreseeability rule, can a defendant be liable for harm that the defendant did not foresee? Select one: A. No, but the foreseeability rule only applies to especially bizarre or unexpected circumstances. B. Yes, the foreseeability rule permits liability where a reasonable person would have foreseen the outcome, even if the defendant did not. C. Yes, the foreseeability rule says that the plaintiff's harm must be foreseeable by the particular jury members. D. No, because the foreseeability rule says that the plaintiff's harm must have been foreseeable by the particular defendant.

B. Yes, the foreseeability rule permits liability where a reasonable person would have foreseen the outcome, even if the defendant did not.

Fraud is Select one: A. The perception by one or both parties to a contract that does not agree with the facts. B. The use of a threat or violence to compel a party to act contrary to his or her wishes. C. The improper use of power or trust to deprive one party of free will to the extent that genuine assent cannot be granted by that party in good faith. D. A false representation of a material fact knowingly made with intent to deceive on which the other party has placed justifiable reliance to his or her detriment.

D. A false representation of a material fact knowingly made with intent to deceive on which the other party has placed justifiable reliance to his or her detriment.

The type of contract that is an obligation imposed by law because of the parties' conduct or some special relationship between them or because one of them would otherwise be unjustly enriched is a quasi-contract also known as Select one: A. An implied-in-fact contract. B. An implied-in-law contract. C. A voidable contract. D. An executory contract.

B. An implied-in-law contract.

Which one of the following is the standard of care for a bailee when a bailment is for the bailor's and bailee's mutual benefit? Select one: A. Reasonable care under the circumstances B. Only a slight amount of care C. Care that is economical under the circumstances D. An extraordinary degree of care

A. Reasonable care under the circumstances

Gerry is an agent for Homesafe Insurance Company. Homesafe's underwriting guidelines prohibit agents from writing coverages on houses that are not built by a licensed contractor. Gerry has written coverage for the West's home, which was not constructed by a licensed contractor. The West's have suffered a fire loss. Homesafe can ratify or confirm the transaction or Select one: A. Refuse to approve the purported agent's unauthorized acts. B. Decline the transaction. C. Take away Gerry's binding authority on homeowner's risks. D. Ratify the agent.

A. Refuse to approve the purported agent's unauthorized acts. If a person acts as agent to one who has given no actual consent or authority, the purported principal has two options: ratify or confirm the transaction or refuse to approve the purported agent's unauthorized acts.

Charlotte, while acting as a manager for the Richley Company, committed a tort against Hanna. Hanna filed suit against Charlotte and Richley seeking compensation. Charlotte contended that since she was acting as a manager for Richley when the tort was committed, only Richley—and not Charlotte—could be liable under tort law. The court will likely Select one: A. Reject Charlotte's argument because the actual tortfeasor is always liable for committing a tort. B. Accept Charlotte's argument because only Richley can be liable in tort under these facts. C. Accept Charlotte's argument if Richley has insurance covering her conduct. D. Reject Charlotte's argument because managers are liable for all torts committed in business.

A. Reject Charlotte's argument because the actual tortfeasor is always liable for committing a tort. In addition to the corporation itself, the actual tortfeasor is always liable for torts he or she commits. Managers are not liable for all torts committed in business, however. And whether Richley has insurance or not does not change Charlotte's possible tort liability.

Victor, owner of Victor's Motorcycle Shop, allowed Tobias to sell his individually designed leather jackets in his shop. Customers believed that Tobias worked for Victor. This example illustrates Select one: A. Agency by estoppel. B. Agency by appointment. C. Agency by ratification. D. Agency by association.

A. Agency by estoppel.

If the agent were given no authority to hire subagents, the Select one: A. Agent, not the principal, is responsible for the compensation B. Principal is responsible for compensation of the subagent. C. Agents in the office divide and each pay a portion of the subagent's compensation. D. Principal and the agent divide the compensation cost of the subagent.

A. Agent, not the principal, is responsible for the compensation Likewise, if the agent has the authority merely to delegate duties to a subagent, the agent, not the principal, is responsible for compensation.

The Health Insurance Portability and Accountability Act (HIPAA) mandates the disclosure of certain privacy practices to patients. St. Sans Hospital provides every new patient with a notice about the right to medical records and information under HIPAA, and information about the option to have one's name included in the hospital's directory. Which one of the following does St. Sans Hospital need to provide in order to fully comply with HIPAA? Select one: A. An explanation of how to file complaints with the relevant healthcare provider and with the Department of Health and Human Services B. The method by which patients may make special requests for confidential communications C. Disclosure of the identity of those who have accessed the patients' health information in the past six years D. The contact information for the hospital's HIPAA staff, privacy officers, and hospital administrators

A. An explanation of how to file complaints with the relevant healthcare provider and with the Department of Health and Human Services

Two teenage boys were thrown from a roller coaster when the safety harness failed. One of the victims died at the scene and the other suffered serious injuries which resulted in limited use of his right leg. Both families filed lawsuits against the roller coaster manufacturer (RC Rides) and the amusement park where the accident occurred (WP Amusements). During the investigation it was discovered that RC Rides was aware of issues with the safety harnesses. While there had never been a serious accident, there had been a number of reports of the harness failure. The owners of RC Rides made an effort to correct the issue on new rides, but decided not to address all of the older roller coasters in use. WP Amusements was never advised of the concern with the safety harness. In an effort to punish and make an example the manufacturer, the court ordered RC Rides to pay $500,000 in addition to the compensatory damages awarded to the boys and their families. Which one of the following types of damages does the $500,000 award represent? Select one: A. Punitive damages B. Wrongful death damages C. Special damages D. General damages

A. Punitive damages Punitive damages are awarded by a court to punish a defendant for a reckless, malicious, or deceitful act and to deter similar conduct. The award need not bear any relation to a party's actual damages.

In a claim for failure to advise the insurance customer, the producer's defense would be to show that the advice provided was Select one: A. Reasonable and appropriate. B. Timely and based on information provided by the insured. C. Responsive and tailored to the specific needs of the insured. D. Proper and necessary.

A. Reasonable and appropriate.

When Lex defaulted on his rent, his landlord, Pete, seized possession of Lex's property and held it for the rent. The action by Pete is known as Select one: A. A constructive eviction. B. Distraint. C. A self-help eviction. D. An actual eviction.

distraint Pete did not actually evict Lex or establish a constructive eviction. He did however, exercise his right to seize Lex's property and hold it until he acquired the rent. A landlord's right to seize possession of a tenant's property and hold it for rent when the tenant has defaulted on the rent is known as a distraint.

Gilda hired artist Lance to restore an expensive painting for $1,000. After working on the painting, Lance decided the job was too labor intensive and demanded $3,000. Gilda sued Lance for breach of contract. A court is most likely to Select one: A. Require specific performance. B. Mandate a contract novation. C. Grant an injunction. D. Award damages.

A. Require specific performance. specific performance would require Lance to finish the job.

The principal notifies the agent by any word or act that the agent no longer has authority. This act of the principal is known as Select one: A. Revocation. B. Just cause. C. Resolution. D. Renunciation.

A. Revocation.

Feuding neighbors Rob and Barry are involved in an argument about Rob's right to fly his large remote airplanes over any of Barry's land. Barry's land is a half a mile from Rob, and Rob maintains that nobody is disturbed by his hobby nor does he invade but a small part of what Barry refers to as his "rightful air space." In this situation it is likely that if Barry sues Rob, a court of law would Select one: A. Rule against Barry since generally planes can fly over land as long as they do not interfere unreasonably with the owner's use and enjoyment of the land. B. Rule for Barry since the ownership of land carries no rights over the air space above the land. C. Issue an injunction to halt Rob's intrusion in Barry's air space. D. Allow Rob to use the air space regardless of Rob's interference with Barry's use and enjoyment of the land.

A. Rule against Barry since generally planes can fly over land as long as they do not interfere unreasonably with the owner's use and enjoyment of the land.

Ed sold a cottage to Harlem. When he gave Harlem the deed to the cottage, Harlem noticed that Ed warranted the cottage was free of encumbrances and defects in title that might have been created since the time Ed took possession of the title five years prior. The type of deed received by Harlem from Ed is a Select one: A. Special warranty deed. B. General warranty deed. C. Bargain-and-sale deed. D. Quit-claim deed.

A. Special warranty deed. Special warranty deeds contain warranties against only those encumbrances and defects in title that might have been created since the grantor (Ed) took title.

Carla was admitted to a nursing home and gave her son, Sebastian, power of attorney to handle her financial matters. This is an example of Select one: A. Agency by authorization. B. Agency by appointment. C. Agency by estoppel. D. Agency by ratification.

B. Agency by appointment.

Sandee owed Patty $200, but knowing Sandee was low on funds, Patty asked Sandee to wallpaper her living room instead of paying the $200. Sandee agreed that she would do the wallpapering to satisfy her $200 debt. This contractual arrangement is known as Select one: A. Contract reformation. B. An accord and satisfaction.Correct. An accord is an agreement between contracting parties that one of them is to substitute a different performance for the performance required in the contract and completion of that performance (wallpapering) is the satisfaction. This was not substantial performance nor was it a novation or reformation of the original contract. C. A novation. D. Substantial performance.

B. An accord and satisfaction An accord is an agreement between contracting parties that one of them is to substitute a different performance for the performance required in the contract and completion of that performance (wallpapering) is the satisfaction. This was not substantial performance nor was it a novation or reformation of the original contract.

Which one of the following best explains how a successful litigant enforces an arbitration award? Select one: A. An arbitrator cannot award money, but the decision can be used as persuasive evidence in a real court. B. An arbitrator's award is filed with the appropriate court and is as enforceable as any court judgment. C. The parties participating in the arbitration agree in a contract to comply with the arbitrator's decision. D. The winning party can take the arbitrator's award directly to a sheriff to mandate compliance with the decision.

B. An arbitrator's award is filed with the appropriate court and is as enforceable as any court judgment.

Jessica signed up to be on a new reality television program, "Scareshow," where contestants were exposed to their fears for the chance to win prizes. When Jessica was on the set, the producers filled her trailer with dozens of snakes. Jessica was so frightened that she became physically ill, and sued the Scareshow producers for negligent infliction of emotional distress. Which one of the following defenses should the producers use to bar Jessica's recovery? Select one: A. Release of liability B. Sovereign immunity C. Comparative negligence D. Assumption of risk

D. Assumption of risk

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? Select one: A. By operation of law B. By the parties' contract of expression C. As the result of the producer's death D. As a result of the insurer's insolvency

B. By the parties' contract of expression

Because he was in a hurry, Jeff knowingly jogged through a clearly marked dangerous construction zone where he was injured by a front loader hauling bricks. The contractor's best defense against a lawsuit from Jeff would be the defense of Select one: A. Gross negligence. B. Res ipsa loquitur. C. Last clear chance. D. Assumption of risk.

D. Assumption of risk.

Which one of the following contract types requires each party to perform? Select one: A. Unilateral B. Mutual C. Implied D. Bilateral

D. Bilateral

Bill, 62, felt that he suffered age discrimination at his job. Bill decided to go to the Equal Employment Opportunity Commission (EEOC) to complain. While the EEOC reviewed his complaint, Bill became impatient, and filed a lawsuit against his former employer in his state's court. Two months after Bill's lawsuit was filed, the EEOC issued Bill a right-to-sue letter. Which one of the following best describes the mistake(s) Bill made while pursuing his discrimination claim? Select one: A. Bill should have proceeded with administrative enforcement while the EEOC reviewed his complaint, rather than going to state court. B. Bill should have filed a complaint with the appropriate state agency before the EEOC. C. Bill was not old enough to file a complaint under the ADEA for age discrimination. D. Bill was not allowed to sue while the EEOC reviewed his complaint.

D. Bill was not allowed to sue while the EEOC reviewed his complaint. As a prerequisite to instituting a court suit, a person alleging age discrimination must file a charge either with an appropriate state agency or with the EEOC. The employee may not sue while this process continues.

As Bob walks down a country road, he sees a barn on fire. There are several animals in the barn. Bob is afraid of fire so he leaves. Later, the owner of the barn sues Bob for negligence because the barn and the animals burned. Which one of the following best describes Bob's legal situation? Select one: A. Bob will not be held liable because his failure to act was not a proximate cause of the loss. B. Bob will be held liable because his actions were equal to an intentional injury. C. Bob will be held liable because failing to attempt to save the animals was a tort. D. Bob will not be held liable because he had no legal duty to endanger himself.

D. Bob will not be held liable because he had no legal duty to endanger himself. A moral obligation to act is not the same as a legal duty

Oliver committed the crime of financial fraud while acting as a manager for the Pravalt Corporation. As a result of Oliver's conduct, which one of the following could be found guilty under the criminal law? Select one: A. Only Pravalt B. Neither Oliver nor Pravalt C. Only Oliver D. Both Oliver and Pravalt

D. Both Oliver and Pravalt Officers and employees are personally responsible for their criminal acts, so Oliver could be found liable. Pravalt could also be found liable—under the criminal law corporations can be found responsible, sometimes even though they had no criminal intent.

Unincorporated associations can be dissolved in which one of the following ways? Select one: A. By the expiration of a period set up by state law B. By the death or withdrawal of members C. By the death of all directors and trustees D. By court action on the application of creditors

D. By court action on the application of creditors

An insurance agent sent an application for insurance to a non-admitted insurer. The insurer issued the policy. How has an agency relationship been created? Select one: A. By estoppel B. By appointment C. By omission D. By ratification

D. By ratification When an agency relationship is created by ratification, the agent's authority comes into existence, and a contract arises between the purported agent's unauthorized acts.

Strict liability continues to apply in Select one: A. Professional liability. B. Certain copyright activities. C. Music composer activities. D. Certain situations involving animals.

D. Certain situations involving animals.

One of the defenses for libel and slander is conditional privilege. Which one of the following areas applies to conditional or qualified privilege? Select one: A. Public comment B. Insurance rating agencies C. Private interest D. Common interest communications

D. Common interest communications

Pedro purchased an autographed Hank Aaron baseball at Valentin's Antiques. Pedro discovered the baseball was new and the autograph a fraud. Fraud elements have been proven. Which one of the following remedies does Pedro have? Select one: A. Action in deceit with no loss B. Liquidated damages C. A credit from Valentin's Antiques D. Complete unmaking of the contract

D. Complete unmaking of the contract

After a windstorm which opened a hole in the roof, an insured was required to place a tarp over the hole. This requirement is an example of an insurance policy being a Select one: A. Requirement contract. B. Contract of utmost good faith. C. Contract of indemnity. D. Conditional contract.

D. Conditional contract. A conditional contract requires the insured to fulfill the condition of protecting the property from further damage.

Durham Investments is located in State X, but has customers in many of the surrounding states. Its customers must provide the company with personally identifiable information, including their Social Security numbers (SSNs). With regard to data privacy laws, Durham Investments' risk management team should Select one: A. Follow the actions outlined in the Gramm-Leach-Bliley Act. B. Abide by the State X laws. C. Stop collecting SSNs. D. Consider regulations in all of the states it conducts business.

D. Consider regulations in all of the states it conducts business.

Caleb works at Company A where he is paid every two weeks. During the second week of the recent pay period, Caleb worked 38 hours but on Thursday he worked 15 of those 38 hours. Under the Fair Labor Standards Act (FLSA) overtime provision, Caleb Select one: A. Must be paid 15 hours of overtime pay since he worked over 8 hours in one day. B. Does not qualify for overtime since he did not work more than 40 hours during the week. C. Must be paid 7 hours of overtime pay since he worked over 8 hours in one day. D. Will be paid for 15 hours of overtime since he was required to work more than 8 hours in a single day.

B. Does not qualify for overtime since he did not work more than 40 hours during the week.

body type. Emma complained to her employer, who said that the company knew how John operated and that his behavior was not tolerated under the employee handbook. John continued to harass Emma for three more weeks before both John and Emma were terminated. Which one of the following statements is true regarding Title VII in this situation? Select one: A. Emma does not have a case because Title VII does not prohibit discrimination based on sex. B. Emma has a case for a Title VII sexual harassment suit.C C. Emma only has a case for a tort claim for harassment against John. D. Emma has a case for a claim of quid pro quo sexual harassment, according to the interpretation of Title VII by the Supreme Court.

B. Emma has a case for a Title VII sexual harassment suit.

Tommy has recurring nightmares about an auto accident in which he was injured. Two years ago he was subjected to several reconstructive surgeries leaving him with phantom pains due to the loss of one of his legs. Tommy's highly unpleasant mental reactions may indicate an additional award based on Select one: A. Pain and suffering damages. B. Emotional distress damages. C. Special damages. D. Punitive damages.

B. Emotional distress damages. Tommy's injuries are indicative of emotional distress and would be awarded as general (not punitive) damages.

Whitney, a customer service representative (CSR) for Delmond Agency, was authorized to make changes on policies that the agency writes. Whitney changed Carla's auto policy to reflect her new auto purchased last week. Whitney's type of authority is Select one: A. Apparent authority. B. Express authority. C. CSR authority. D. Implied authority.

B. Express authority. Express authority is anything the principal specifically instructs the agent to do and it includes acts incidentally to carrying out specified instructions.

Ricky took his car to Mike, a mechanic, for repair. Which one of the following is true? Select one: A. Ricky is the bailee and Mike is the bailor. B. Ricky is the bailor and Mike is the bailee. C. Mike has no property interests in the car. D. Only Ricky has property interests in the car.

B. Ricky is the bailor and Mike is the bailee.

Which one of the following is an incidental real property right arising from the possession or ownership of land? Select one: A. A trust deed held as an indenture B. Rights to lateral and subjacent support C. An easement created by prescription D. A mechanic's lien held by a contractor

B. Rights to lateral and subjacent support

Some contracts are voidable, and some agreements are void because they are not contracts. When a contract is voidable, the right of avoidance is available only to Select one: A. Parties in privity of the contract. B. The offeror of the contract. C. The offeree of the contract.I D. An innocent or injured party.

D. An innocent or injured party.

harlie contracted to purchase an old barn from Page. Charlie breached the contract and forfeited a deposit to Page. Henry wanted to buy the barn but learns about Charlie's forfeited deposit. Henry does not know Charlie but believes that Page should not keep Charlie's deposit. Henry agrees to purchase the barn only if Page promised to repay Charlie's deposit and Page agrees. In this situation, Charlie is best described as Select one: A. An incidental beneficiary. B. A creditor beneficiary. C. A donee beneficiary. D. An intended beneficiary.

D. An intended beneficiary. Henry intended to benefit Charlie, and regardless of Henry's motive, Charlie is an intended beneficiary with a right to obtain the forfeited deposit from Page.

Ross, a sales clerk for Keithly's Hardware Store, serviced Oscar who paid for his purchases with a check. Keithly's has a policy of credit card or cash only. Ross accepted Oscar's check for his purchases since Oscar has been an excellent customer. What type of authority does this illustrate? Select one: A. Implied authority B. Actual authority C. Employee authority D. Apparent authority

D. Apparent authority

As a personal trainer at Buff's Gym, Harry was responsible for making sure that gym members did not hurt themselves while working out. Harry underwent special training to be able to identify people in danger of injuring themselves. One day, Harry noticed that a woman was struggling with her free weights, but decided not to help her because no one else seemed to notice that she was in trouble. The woman hurt her wrist and threatened to sue Harry and the gym. Which one of the following best describes whether or not Harry is liable for negligence? Select one: A. Harry is liable, because he breached the general duty to aid those in danger, which all citizens owe to everyone. B. Harry is liable, because he owed a duty to protect customers as an employee and failed to apply his specialized skills with reasonable care. C. Harry is not liable, because neither work responsibilities nor moral responsibilities can become the foundation for a tort suit. D. Harry is not liable, because the average person would not have noticed that the woman was in danger, under the reasonable person test.

. Harry is liable, because he owed a duty to protect customers as an employee and failed to apply his specialized skills with reasonable care.

Martin, an agent with Cromley Insurance Company wrote a personal auto policy on a dump truck for James. Dump trucks are on the unacceptable list for personal auto policies for Cromley. Cromley agrees to accept the recent loss that James had in his dump truck. Cromley's acceptance of the recent loss is an example of agency by Select one: A. Appointment. B. Ratification. C. Principal's actions. D. Estoppel.

. Ratification. Ratification is an agency relationship created when a purported principal affirms the act of a party who acted as the principal's agent without prior authorization.

Alex contracted with Joshua to sell Joshua 14 barges of a certain type for an agreed upon price. Alex's supplier then called to announce their bankruptcy and to suggest an alternate supplier. The alternate supplier is a foreign company that Alex refused to use in the past. He told Joshua that it was impossible for him to sell the barges to him. Regardless of how the court responds to a breach of contract lawsuit, this is an example of Select one: A. Objective impossibility that does not discharge the obligation. B. Subjective impossibility that does not discharge the obligation. C. Subjective impossibility that discharges the obligation. D. Objective impossibility that discharges the obligation.

. Subjective impossibility that does not discharge the obligation. Subjective impossibility means that the promisor will not perform even though performance is conceivable. Subjective impossibility does not discharge the obligation because the promisor has assumed the change of personal inability to perform.

Which one of the following is a duty an agent generally owes to a principal? Select one: A. Accounting B. Reasonable consideration C. Discretion D. Privacy

A. Accounting

Authority that an insurer intentionally allows an agent to believe he or she possesses is Select one: A. Actual authority. B. Special authority. C. Apparent authority. D. Third-party authority.

A. Actual authority. Actual authority is that which the principal (insurer) confers upon the agent or allows the agent to believe he or she possesses. It can be express or implied. Implied authority is different from apparent authority, which is a third party's reasonable belief that an agent has authority to act on the principal's behalf.

Companies A, B, C, and D are the sole manufacturers of a specific type of liquid tankers. Company A manufactures 40 percent of the tankers and companies B, C, and D each manufacture 20 percent of the tankers. A tanker made by one of these companies was defective causing it to leak toxic chemicals onto a public parkway, but the fault could not be traced back to a particular manufacturer. Under the enterprise liability concept, Company C is likely to be held Select one: A. 20 percent liable. B. 100 percent liable. C. Liable only if market share liability can be proven. D. Equally liable with the other three companies that manufacture that specific type of tanker.

A. 20 percent liable. If the manufacturer cannot be proven then all four of the companies can be held liable under the enterprise liability or industry-wide liability concept.

Mason sold a ring to Carol. Mason told Carol that the ring was made of solid gold, but both Mason and Carol actually believed the ring was merely gold-plated. In fact, the ring was made out of a copper alloy. This situation is best described as Select one: A. A bilateral mistake, which created a voidable contract. B. A fraud, which created a void contract. C. A unilateral mistake, which created a binding contract. D. A bilateral mistake, which created a binding contract.

A. A bilateral mistake, which created a voidable contract. This situation is best described as a bilateral mistake, which created a voidable contract. A unilateral mistake ordinarily does not affect a contract. Bilateral mistakes generally create voidable contracts. Bilateral mistakes as to subject value are usually not voidable, but mistakes as to subject matter identity are voidable.

Which one of the following statements describes a principal's duty of indemnity for any losses the agent suffered because of agency? Select one: A. A principal must indemnify an agent for the expenses incurred in defending any lawsuits resulting from the agent's authorized acts. B. An agent who makes payments or becomes subject to liability because of a subagent's authority conduct has no right of indemnity from the principal. C. The agent is entitled to indemnification if the expense resulted from the agent's negligent conduct. D. The principal owes a duty of indemnity for any losses or damages the agent has suffered because of agency and incurred through the fault of the agent.

A. A principal must indemnify an agent for the expenses incurred in defending any lawsuits resulting from the agent's authorized acts.

In a suit by a third party against an agent concerning a contract entered into on a principal's behalf, which one of the following personal defenses can the agent set up as though the agent were the sole contracting party? Select one: A. A third party failed to perform the contract. B. The principal or agent failed to perform the contract. C. Requirements of the statute of frauds or statute of limitations were not met.I D. The principal is a minor or bankrupt.

A. A third party failed to perform the contract.

Which one of the following elements is necessary for a plaintiff to prevail in an assault case? Select one: A. A threat is made with the intent of creating fear or apprehension. B. The damages resulting from an assault are significant and measurable in nature. C. A threat is made regardless of whether the individual making the threat can actually act on it. D. There is a fear that there may be physical contact immediately or sometime in the future.

A. A threat is made with the intent of creating fear or apprehension.

A soliciting agent is Select one: A. An insurance producer whose authority is limited by contract with an insurer to soliciting applications for insurance and other acts directly incident to solicitation. B. The name for any insurance agent with the authority to solicit applications for insurance and forward those applications to the insurer. C. The name for any insurance agent whose primary duties involve inducing third parties to apply for insurance. D. An insurance producer who is employed to act on behalf of the insurer within a particular geographic location.

A. An insurance producer whose authority is limited by contract with an insurer to soliciting applications for insurance and other acts directly incident to solicitation.

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 the revocation is effective only when communicated to the offeree and the offeree actually receives the communication. B. 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. C. An offeror can revoke an offer either by expressly refusing to abide by it or by making a new offer to the offeree. D. An offeror can revoke an offer by any reasonable means, at any time before the offeree completes performance of the contract.

A. An offeror can revoke an offer any time before acceptance, but the revocation is effective only when communicated to the offeree and the offeree actually receives the communication.

If an insurer develops a pattern or practice of ratifying unauthorized agents' actions, an agency relationship can Select one: A. Arise by implication. B. Give rise to fines and penalties imposed upon the insurer. C. Result in an expansion of coverage beyond the coverage type or amount intended. D. Be mandated by law.

A. Arise by implication. The insurer must evaluate whether it should enter into a formal relationship through an agency contract or deny the relationship and refuse to ratify the agent's submissions.

If an agent has fraudulently represented to a third party that the contract is on the agent's behalf alone or the agent represents someone other than the real principal, the third party has the right to Select one: A. Avoid the contract. B. Cancel the contract. C. Sue for damages. D. Renegotiate the contract.

A. Avoid the contract.

The management of Manufacturing Company (MC) was concerned about the number of employees who would soon be employed long enough to be eligible for retirement benefits that were very expensive to provide. Ayoub was close to retirement, so MC, relying on the at-will doctrine, fired him without cause. Which one of the following statements is true? Select one: A. Ayoub may have a valid claim against MC if his state allows a covenant-of-good-faith exception to the at-will doctrine. B. Ayoub may have a valid claim against MC under the doctrine of promissory estoppel. C. Ayoub has no recourse against MC because in an at-will state, an employer can fire someone for any reason or no reason at all. D. Ayoub may have a valid claim against Ayoub because of an implied-in-fact contract.

A. Ayoub may have a valid claim against MC if his state allows a covenant-of-good-faith exception to the at-will doctrine.

Jack's investment business, Company Z, is incorporated in State A and it conducts some activities and transactions in State B. Every quarter, there is a shareholder meeting in State B and the corporation maintains a bank account in State B for the purpose of conducting an occasional isolated short-term transaction. Which one of the following statements is true regarding Company Z? Select one: A. Because Company Z transacts any corporate business in State B it is involved in interstate commerce for business purposes. B. Having meetings, maintaining a bank account, or conducting isolated short-term transactions are not considered interstate business for business purposes. C. Because Company Z has a bank account in State B it is involved in interstate commerce for business purposes. D. Because Company Z holds scheduled meetings in State B it is involved in interstate commerce for business purposes.

A. Because Company Z transacts any corporate business in State B it is involved in interstate commerce for business purposes.

All of the following are either complete or partial defenses in a products liability lawsuit, EXCEPT: Select one: A. Breach of warranty B. Alteration C. Misuse D. State-of-the-art

A. Breach of warranty

Which one of the following categories of insurance producers has the least authority to act on behalf of insurers? Select one: A. Brokers B. General agents C. Soliciting agents D. Special agents

A. Brokers A broker is an independent producer who represents insurance customers.

Which one of the following is a means to terminate the agency relationship between a producer and insurer? Select one: A. By the parties' expression B. By a subagents appointment C. By an insured's lawsuit D. By a poor loss ratio

A. By the parties' expression

Some bailment contracts require compensation. When expressed or implied compensation is not paid, the bailee Select one: A. Can assert a lien or even a possessory lien until the compensation is paid. B. Can use the property for purposes that were not contemplated by the bailment contract for as long as the debt remains unpaid. C. Must return the property to the bailor and seek restitution for the debt through litigation. D. May sell the property after issuing notice of nonpayment to the bailor and waiting a reasonable amount of time.

A. Can assert a lien or even a possessory lien until the compensation is paid.

Upon his death, Vince owed his friend Phil $5,000. Al, the executor of Vince's estate, orally promises to pay Phil the $5,000 from his own personal funds. If Al does not pay Phil the $5,000, Phil Select one: A. Cannot collect from Al because such a promise must be in writing to be enforceable. B. Can collect the $5,000 from Al since his oral promise is enforceable if collected within 12 months of Vince's death. C. Can collect the $5,000 from any of Al's creditors. D. Cannot collect the $5,000 from Al because the debt is not Al's debt.

A. Cannot collect from Al because such a promise must be in writing to be enforceable.

Jack and JoAnn who are spouses, live in a western state of the United States and when they divorced they equally shared all property acquired while they were married. There was also property owned individually at the time they were married as well as property inherited by JoAnn. Their state is using laws relating to Select one: A. Community property. B. Separate property. C. Jointly titled property. D. Property in its entirety.

A. Community property.

Jessica, age 21, promised a 1995 Ford as a gift to her friend, Michelle, age 50. Which one of the following is the missing element that would make this gift transaction a contract? Select one: A. ConsiderationCorrect. Consideration makes a promise a contract. A promise to make a gift or to do something without receiving consideration in return is not enforceable. It is merely a gratuitous promise. B. Assent C. Capacity D. Legal purpose

A. Consideration Correct. Consideration makes a promise a contract. A promise to make a gift or to do something without receiving consideration in return is not enforceable. It is merely a gratuitous promise.

Which one of the following documents specifying corporate goals and objectives and the kind of business for which the corporation is being organized must generally be filed by a corporation? Select one: A. Corporate charter or articles of incorporation B. Corporate policies and procedures C. Corporate mission statement D. Corporate compliance plan

A. Corporate charter or articles of incorporation

Corporation Towns an office building that it leases to occupants. Cooperative ownership provides for operation and maintenance by someone other than the tenant while guaranteeing a right of occupancy for as long as desired. An advantage of this arrangement for Corporation T is that Select one: A. Corporation T has control, in that the corporation ordinarily obtains the mortgage, constructs the building, and then operates it. B. Tenants never lose any equity they have built up in the property making this an attractive arrangement to tenants. C. The mortgagee cannot foreclose on the property which gives tenants a sense of security and stability. D. Finding a purchaser for the premises is easily accomplished due the cooperative lease arrangement.

A. Corporation T has control, in that the corporation ordinarily obtains the mortgage, constructs the building, and then operates it.

Generally, how do courts determine that a defendant is liable under negligence per se? Select one: A. Courts determine that a defendant is negligent per se when the defendant has violated a statutory standard. B. Courts determine that a defendant is negligent per se when the defendant has committed a wanton immoral act. C. Courts determine that a defendant is negligent per se when the defendant is in all likelihood negligent under the given circumstances. D. Courts determine that a defendant is negligent per se when the defendant took on the risk of liability under a contract.

A. Courts determine that a defendant is negligent per se when the defendant has violated a statutory standard.

Emilia's neighbor, Lucas, planted a garden by Emilia's property. Emilia knew that Lucas's garden was at risk of damage from flowing rainwater because of the hills at the edge of her property. Emilia also knew that the trees on her property were old and could fall in strong winds. During the next storm, the garden was destroyed by a combination of rainwater, falling branches, and rocks rolling from Emilia's hills. Which one of the following is correct concerning whether Lucas has a claim against Emilia for any or all of the natural conditions that destroyed his garden? Select one: A. Emilia's only duty in this case was to remove the old trees that she knew might fall, and she is not liable for any other natural conditions. B. Emilia is liable for all the natural conditions on her land that caused injury off her land, except for rainwater. C. Emilia is not liable for the damage to the garden, because, in rural areas, landowners have no affirmative duty to inspect trees, rocks, or rainwater runoff. D. Emilia is liable for the water and tree branches, but not the rocks, because she was not aware of that particular danger.

A. Emilia's only duty in this case was to remove the old trees that she knew might fall, and she is not liable for any other natural conditions.

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. ExecutedCorrect. B. Exacted C. Executory D. Completed

A. Executed

A federal contractor with a $100,000 procurement contract failed to report a drug-related employee conviction that resulted from workplace activity. This failure led to an investigation. The contractor allowed the federal government to administer polygraph tests as part of the investigation. The investigation uncovered the fact that the contractor also failed to pay overtime to certain administrative employees and conducted background checks as part of the new hire process. Which one of the following describes the contractor's violation? Select one: A. Failure to report the drug-related employee conviction B. Conducting background checks of job applicants C. Allowing polygraph testing of employees D. Failure to pay overtime to administrative employees

A. Failure to report the drug-related employee conviction The Drug-Free Workplace Act requires federal contractors to report certain drug convictions. Federal investigators are allowed to use polygraphs, administrative employees are exempt from overtime, and background checks are allowed.

The right to full ownership and the right to possess real property are characteristics of a Select one: A. Fee simple estate. B. Life tenancy. C. Leasehold interest. D. Cooperative form of ownership.

A. Fee simple estate.

Sarah lost the use of her right foot when on her 10th birthday she entered a convenience store and the automatic door malfunctioned and caught Sarah's foot and crushed it. The court awarded Sarah damages for her medical costs as well as for her extensive pain and suffering. The pain and suffering damages are Select one: A. General damages. B. Exemplary damages. C. Nominal damages. D. Special damages.

A. General damages.

Emilia and Sho recently went to closing on their home purchased from Hector. They were able to get a real bargain on the house. At closing which one of the following deeds would be most beneficial for Emilia and Sho? Select one: A. General warranty deed B. Bargain and sale deed C. Quit-claim deed D. Special warranty deed

A. General warranty deed

Billy purchased a property with a deed that contained grantor Charlie's warranty that the title was free of all encumbrances. It also is warranted that Charlie has the title being transferred, and that no one else has a better title. Charlie's deed is a Select one: A. General warranty deed. B. Bargain-and-sale deed. C. Quit-claim deed. D. Special warranty deed.

A. General warranty deed.

The defenses to the tort of battery are consent, self-defense, defense of others, and Select one: A. Physical discipline. B. Remorse for the act. C. Unintentional harm or injury. D. Absence of harm or injury.

A. Physical discipline.

When undisclosed principals are involved, their rights against third parties can be limited in four situations. Which one of the following is one of these situations? Select one: A. Greater burden on the third party B. Fraudulent concealment of the third-party's identity C. Judgment between the third party and the agent after the principal's identity becomes known D. Company performance contracts

A. Greater burden on the third party An undisclosed principal cannot enforce a contract against a third party if enforcement would impose a substantial additional burden on the third party

In a contract for 1,000 loaves of bread, grocer Andy wrote out the words "one thousand" but typed in the number 100. The supplier delivered 100 loaves which resulted in a loss of a major customer. Which one of the following priorities will apply in this case? Select one: A. Handwriting prevails over typewriting. B. Words prevail over printing. C. Figures prevail over words. D. Printing prevails over handwriting.

A. Handwriting prevails over typewriting.

for the extra two bushels and Hank refused to give her the apples unless she paid for all six bushels. Which one of the following statements is true? Select one: A. Hank breached the contract. B. There was no valid offer made and therefore no contract between Hilda and Hank. C. Hank and Hilda did not mutually assent to the terms of the contract when it was formed. D. There was no communication of intent to contract from Hank to Hilda.

A. Hank breached the contract.

Leah contracted with Samuel to purchase all of the firewood that she needed for the winter from him. Samuel was unaware that Leah was actually acting as agent for Hanna, who owns two ski resorts. Hanna's requirements for firewood are substantially greater than Samuel can supply. Which one of the following statements regarding the enforceability of the contract is correct? Select one: A. Hanna cannot enforce the contract against Samuel because Hanna is an undisclosed principal and the enforcement would impose a substantially greater burden on Samuel. B. Hanna can enforce the contract against Samuel because Samuel neglected to inquire with Leah about any undisclosed principals. C. Hanna can enforce the contract against Samuel because a contract that binds a principal to a third party also binds the third party to a principal. D. Hanna cannot enforce the contract against Samuel because the contract was a personal performance contract and Hanna was an undisclosed principal who cannot be substituted for Leah.

A. Hanna cannot enforce the contract against Samuel because Hanna is an undisclosed principal and the enforcement would impose a substantially greater burden on Samuel.

Annabel, a medical secretary for Dr. Magnus, sent instructional packets concerning upcoming surgeries to his patients. Although the packets normally include surgery details, Annabel included hotel and restaurant information should an overnight stay be required. What type of authority described this example? Select one: A. Implied authority B. Direct authority C. Reasonable authority D. Apparent authority

A. Implied authority Implied authority is implicitly conferred on an agent by custom, usage, or principal's conduct indicating the intention to confer such authority. Agents can reasonably infer that their actions agree with prevailing custom unless the principal gives different instructions.

Buyer Cecil contracted with seller Liza to deliver 25, 1,000-piece puzzles by January 10 for a community contest to be held on January 11. Liza did not deliver the puzzles until January 12. If Cecil sues Liza, it is likely that Liza's failure to deliver by January 10, Select one: A. Is a breach of contract. B. Will require court-ordered substantial performance. C. Could result in the contract being rescinded by Cecil. D. Will result in contract novation.

A. Is a breach of contract.

Charlotte wanted a swimming pool built in her backyard, so she asked various pool installers she knew to give her an estimate. Only Emma replied, and the price she quoted to Charlotte was much more than Charlotte wanted to pay. A party that asks for offers Select one: A. Is free to accept or reject any offers that the party receives. B. Is actually making an offer, and any reply to the request is an acceptance of the original offer. C. Must accept any reasonable offers that the party receives. D. Must accept any offers that the party receives.

A. Is free to accept or reject any offers that the party receives.

Leah called her insurance agent Matthias right after Leah purchased her first car. Leah said: "I need coverage on my car (which she described in detail)—$100,000 liability and $250 deductible collision and comprehensive." Mathias responded: "Great—you have this insurance effective immediately." Which one of the following statements about this conversation is true? Select one: A. It resulted in a binding oral insurance contract. B. It resulted in a binding insurance contract, but only if an insurer ultimately issues the policy. C. It was an offer to purchase insurance—no contract was formed. D. It was the mere solicitation of an offer—no contract was formed.

A. It resulted in a binding oral insurance contract. Generally, acts or words of intent to offer and accept establish a binding insurance contract, whether written or spoken. All the elements of a binding contract were present here—there was an offer, by Leah, and an acceptance by Mathias.

Which one of the following is an example of an employee? Select one: A. Jeter works as seamstress at Lo Suds Laundry. Jeter works when the laundry is open. Jeter's charges to customers for her sewing were handled by Lo Suds. B. Connor, a cabinetmaker, installed cabinets in Merve's house. The cabinets were completed in six weeks, and Connor was paid by the job. C. Nets does brake jobs next to Magnus Mechanics. Work is referred to Nets by Magnus, but Nets has a separate shop and sets his own hours. D. Roscoe does refinishing work for Mason's Moving Company when furniture is damaged by the moving company. Roscoe sets up his own appointments and is paid separately by the moving client.

A. Jeter works as seamstress at Lo Suds Laundry. Jeter works when the laundry is open. Jeter's charges to customers for her sewing were handled by Lo Suds.

Johnny sold a cabin to Hannah for $15,000. Two days later he sold the same cabin to Arnie for $10,000. A week later, Johnny sold the cabin to Brenda and signed a contract of sale for $22,000. That same day, Johnny sold the cabin to his sister Kate for $5,000. Kate registered the deed but later learned of the other purchase arrangements. Which one of the purchasers has priority ownership of the cabin? Select one: A. Kate B. Hannah C. Arnie D. Brenda

A. Kate Because Kate recorded or registered the deed she has priority property rights over other purchasers. An unrecorded document affecting property rights is effective between the immediate parties but is not effective against subsequent purchasers for value without notice or knowledge. Since Kate was not aware of the other purchasers when she recorded the deed, she has priority ownership rights.

Which one of the following is an example of a situation in which courts frequently apply the doctrine of res ipsa loquitur? Select one: A. Lawsuits by passengers against common carriers B. Assault and battery C. Divorce D. Intentional infliction of emotional distress

A. Lawsuits by passengers against common carriers

Leah was convinced that the record of a past injury was preventing her from getting the job she wanted. She told her healthcare provider that she wanted to see, copy, alter, and possibly destroy her medical records. Which one of the following describes Leah's requests that must be granted under the Health Insurance Portability and Accountability Act (HIPAA)? Select one: A. Leah has the right to see, copy, and request to amend her medical records under HIPAA. B. Leah has the right to see, copy, alter, or destroy her medical records under HIPAA. C. Leah has the right to see and copy her medical records under HIPAA. D. Leah has the right to see her medical records under HIPAA.

A. Leah has the right to see, copy, and request to amend her medical records under HIPAA.

CarComp was an automobile manufacturing company with two major groups of employees: assembly line and consultants. The 100 assembly line workers, who were paid an hourly wage to construct cars, were all in favor of unionizing, and they were concerned about workplace safety. The 10 car consultants worked in the same place and used the same machines as the line workers, but the consultants were tasked with the additional duty of ensuring the quality of the final product. The consultants were paid a significantly higher wage, and they were also primarily interested in workplace safety. None of the consultants supported unionizing. Under the National Labor Relations Act, a union that encompasses both the line workers and the consultants is Select one: A. Likely to form, because all the employees have similar skills, work in the same place, and have similar interests. B. Not likely to form, simply because none of the consultants support unionizing. C. Likely to form, merely because the majority of employees are in favor of unionizing D. Not likely to form, because the employees are not in the same unit as determined by their pay scale.

A. Likely to form, because all the employees have similar skills, work in the same place, and have similar interests.

The agent must not undertake any business venture that competes or interferes with the principal's business. This agent duty to the principal is Select one: A. Loyalty. B. Reasonable care. C. Allegiance. D. Accounting.

A. Loyalty. One of the most important agent's duties is loyalty to the principal's interest not competing or interfering with their business.

The Argot Corporation wanted to absorb the Barnley Corporation into Argot's business. Argot believed that the simplest way to do this was to make an attractive offer to Barnley's current stockholders to purchase their shares. If Argot decided to take this action, Argot would have Select one: A. Made a tender offer B. Brought about a corporate dissolution. C. Conducted a share exchange. D. Executed a corporate merger.

A. Made a tender offer One method of acquiring an unwilling corporation is for the aggressor corporation to purchase sufficient shares of that corporation to vote in its own board of directors. This is called a tender offer.

Which one of the following is most likely a "disability" under the Americans with Disabilities Act? Select one: A. Morphine addiction B. A curable, incommunicable sexually transmitted disease C. Illiteracy because of poor education D. The flu

A. Morphine addiction

If a contract between a producer and insurer expressly limits the producer's power to soliciting business, the producer has Select one: A. No additional actual authority. B. Authority to collect premiums but not to issue policies. C. Binding authority only. D. Authority to complete the application but not to collect premiums.

A. No additional actual authority.

Which one of the following special characteristics of insurance contracts reflects the idea that insurance companies should be able to select persons who will be insured by them? Select one: A. Nontransferable contract B. Contract of indemnity C. Contract of adhesion D. Contract of utmost good faith

A. Nontransferable contract

Pam has been off work because of pregnancy and prenatal care. Pam has requested and has been approved for Family Medical Leave Act (FMLA) benefits but she is worried about losing her current job and having to return to a different job which might require additional training. She is also concerned that the FMLA leave will impact her seniority and her retirement benefits. Which one of the following is true regarding Pam's qualified leave? Select one: A. Pam's employer is required to provide up to 12 weeks of unpaid leave for her qualified leave in a 12 month period. B. Pam must be allowed to return to her same position but she will receive pro-rated salary increases or bonuses based on the time away from the job due to FMLA time away from work. C. Pam's employer is not required to maintain healthcare coverage under Pam's group health insurance while she is on FMLA leave. D. Pam will most likely experience a loss of employment benefits accrued prior to the date of her leave since FMLA leave generally constitutes a break in service.

A. Pam's employer is required to provide up to 12 weeks of unpaid leave for her qualified leave in a 12 month period.

City mayor Tony wants to assign a special use for a small area of land where the city recently demolished city-owned condemned apartments. The surrounding area is not zoned for this type of usage but Tony wants a zoning exception. What he is suggesting is an example of Select one: A. Spot zoning. B. Eminent domain rights. C. Exclusionary zoning. D. Non-conforming use.

A. Spot zoning. Spot zoning involves a provision in a general zoning plan that assigns a different use for a small area of land than that of the surrounding area.

Susan owns and operates a gift shop. Which one of the following standards of care does Susan owe to patrons of her store? Select one: A. Susan must take steps to ensure that the premises are reasonably safe. B. Patrons take the store as they find it; Susan need only avoid actively harming them. C. Susan must exercise extra special care to make the premises safe for patrons. D. Susan is not obligated to warn patrons of hidden hazards.

A. Susan must take steps to ensure that the premises are reasonably safe.

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? Select one: A. Tania has no claim because neither the landowner nor the possessor has a duty to protect the public from natural conditions of the land. B. Tania has a claim against Nicolas but not Carolina, because only landowners are liable for injuries caused by natural conditions of the land. C. Tania has a claim against Carolina but not Nicolas, because Carolina had a duty to warn visitors of all dangers present on or inherent in the property. D. Tania has a claim against Carolina but not Nicolas, because only the possessor of property can be liable for injuries to third parties that occurred on the possessed land.

A. Tania has no claim because neither the landowner nor the possessor has a duty to protect the public from natural conditions of the land.

Tania is the chief information security officer at Millstone Insurance. Her goal is to establish a culture of data security and cybersecurity throughout the organization. Tania provides training at all new employee orientation sessions, conducts quarterly audits, and consistently provides reminders and updates. Any employees who collect customer and claimant data need to understand the regulations governing data collection. Which one of the following federal regulations is particularly important for employees in the claims department at Millstone Insurance? Select one: A. The Health Insurance Portability and Accountability Act B. The Federal Information Security Management Act C. The Gramm-Leach-Bliley Act D. The Cybersecurity Information Sharing Act

A. The Health Insurance Portability and Accountability Act

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? Select one: A. The agreement was not sufficiently specific on key terms. B. Oral agreements to provide insurance are not enforceable. C. The agreement was void as against public policy. D. There is no consideration supporting this agreement.

A. The agreement was not sufficiently specific on key terms. To be effective, an agreement to insure, whether oral or written, must have certain key components, i.e., types of coverage sought, object or premises to be insured, amount of insurance, insured's name, and duration of coverage. These agreements are otherwise appropriate, whether oral or written.

Don entered into a contract for performance with a supplier. The supplier claimed it had provided this type of service several times before and provided written testimonials of its competence by previous customers. The supplier's performance is unacceptable to Don, who has lost business as a result. Don later discovered that the supplier had never done this type of work before and the testimonies were phony. Which one of the following statements is true? Select one: A. The contract is voidable because all the elements of fraud are present. B. The contract is valid because the testimonies were just "sales talk." C. The contract is valid because there was genuine assent on both sides. D. The contract is invalid because the supplier lied.

A. The contract is voidable because all the elements of fraud are present.

If an insurer discovers a question of coverage under an insured's policy but elects to defend the insured without issuing a reservation of rights letter or executing a nonwaiver agreement, a court would likely hold that Select one: A. The insurer has waived any coverage defenses. B. The insurer is liable for breach of contract. C. The insurer has preserved all coverage defenses. D. The insurer retains the right to deny coverage later.

A. The insurer has waived any coverage defenses.

Alva had an auto insurance policy written by Guilford Insurance Co. Alva had an auto accident with Furkan. Furkan was injured in the accident and he filed suit against Guilford for his damages. Guilford filed a motion to dismiss the lawsuit, claiming that Furkan had no right to sue Guilford. Which one of the following correctly states how the court will rule on Guilford's motion? Select one: A. The motion will be denied, if a direct-action statute has been enacted. B. The motion will be denied because liability insurers generally owe a duty to third-party claimants. C. The motion will be denied, if Alva asks Guilford to permit Furkan to sue Guilford. D. The motion will be denied because third parties may sue insurers of negligent parties.

A. The motion will be denied, if a direct-action statute has been enacted.

If an organization is located in a state with a breach notification law that provides safe harbor for encrypting data, Select one: A. The organization will be more likely to encrypt data, thus reducing the chances of the data being accessed by unauthorized entities. B. The organization is exempt from state notification laws, whether or not it encrypts data. C. The organization will be less likely to encrypt data, as its compliance will be not be waived if it does encrypt data. D. The organization will be less likely to encrypt data, thus reducing the chances of that data being accessed by unauthorized entities.

A. The organization will be more likely to encrypt data, thus reducing the chances of the data being accessed by unauthorized entities.

Julio had a commercial insurance policy with Barnley Insurance. In Julio's application for this policy, Julio said that his building had a sprinkler system. Julio's insurance policy had a provision stating that the application is part of the insurance policy. Which one of the following factors would most likely result in a court finding that Julio's statement about the sprinkler system constituted a warranty? Select one: A. The statement was clearly and unmistakably intended by the parties to be a warranty B. The statement was made with knowledge of its falsity C. The statement pertained to a matter that was material D. The statement was false

A. The statement was clearly and unmistakably intended by the parties to be a warranty For a promise to be a warranty: (1) the parties must have clearly and unmistakably intended it to be one and (2) the statement must form a part of the contract itself. The policy said that the application—and thus statements in it—was a part of the policy. So the most important additional factor would be an unmistakable intention that the statement was intended to be a warranty.

Paul and Jerry were both six years old when they entered a neighbor's home and used baseball bats to smash and break household items. When establishing liability for Paul's and Jerry's actions, the court will most likely primarily consider Select one: A. The tortfeasors' capacity. B. It to be liability by conspiracy. C. Their vicarious liability as children. D. It as a mass tort action.

A. The tortfeasors' capacity. Correct. The tortfeasors' capacity refers to whether someone has the capacity to form intent for a tortious act.

Alva, a life insurance agent, recently completed Alex's life application for Blithe's Life Insurance Company. Alex paid the first full premium due and the policy became effective. If Alex paid no more premiums, which one of the following could result? Select one: A. There is a forfeiture of policy rights B. The coverage is cancelled back to the effective date. C. The policy is void. D. Insurer Blithe does not return the accumulated cash value.

A. There is a forfeiture of policy rights

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 an agreement to rescind. B. There was a personal satisfaction contract. C. There was substantial performance of a contract. D. There was a discharge by performance.

A. There was an agreement to rescind. Just as parties can agree to form a contract, they can also agree to rescind it.

Three-year-old Eddie unlatched the gate of a neighbor's chicken coop and all the chickens ran away. Eddie's parents refused to pay the neighbor the $300 requested for the loss of the chickens. If the neighbor sues Eddie alone, which one of the following concepts will be most significant? Select one: A. Tortfeasor's capacity B. Outrageous conduct C. Negligent entrustment D. Absolute liability

A. Tortfeasor's capacity

Most states have adopted which one of the following to govern partnerships? Select one: A. Uniform Partnership Act B. Partnership Division USA C. Uniform Partnership Law D. United Partnership Association

A. Uniform Partnership Act

A partner is not liable to the partnership for ordinary negligence or for loss caused by errors in judgment. For which one of the following is a partner liable to the partnership? Select one: A. Wanton misconduct B. Negligence C. Ordinary poor judgment D. Deliberate mistakes

A. Wanton misconduct

The term "usual scope of business of the partnership" refers not only to what the partnership usually does but also Select one: A. What similar partnerships do in the geographical area ordinarily. B. What similar partnerships do in the nation. C. What similar size partnerships do in the regional area. D. What similar size partnerships do in the same business class.

A. What similar partnerships do in the geographical area ordinarily.

If a producer representing multiple insurers contracts with a customer and then fails to designate the insurer providing coverage before a loss occurs, the legal issue is Select one: A. Which, if any, insurer is liable for the loss. B. Whether the insured misrepresented information in the application. C. Whether the policy is binding on all potentially responsible insurers individually and severally. D. The inception and expiration dates of the policy.

A. Which, if any, insurer is liable for the loss.

Ray sells a schooner to Catherine. The bill of sale indicates the price of the schooner as well as the make, model, and year of the boat. Catherine later claims in a lawsuit that Ray had promised to include communications and computer equipment in the sale, and she attempts to support her claim in court with a letter written by Ray. Ray wrote and signed the letter before the date of the final bill of sale, in which he promised to include the claimed items. Under the parol evidence rule, the contract Select one: A. Will not include the letter because the letter cannot be admitted into evidence. B. Will be modified to add only the letter written and signed before the date of the final bill of sale. C. Includes all documents relating to the sale including the letter Ray wrote prior to the sale. D. Will become voidable due to the parol evidence rule.

A. Will not include the letter because the letter cannot be admitted into evidence. The parol evidence rule will prevent the inclusion of the letter Ray wrote prior to the sale and the contract will not be modified. The parol evidence rule is based on the assumption that all prior negotiations, conversations, and agreement were merged into the final, written contract which became the complete statement of Ray's and Catherine's intent.

Which one of the following is the name of the suit that an employee can bring against an employer for illegal termination? Select one: A. Wrongful discharge B. Defamation C. Intentional violation of employment at will D. Breach of employment contract

A. Wrongful discharge

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? Select one: A. Yes. Benjamin created a nuisance, and he can be liable for discharging water on the road, but Katie is not. B. Yes. Benjamin created a hidden danger, and he has a duty to warn of the hazard, but Katie has no duty. C. No, Benjamin is not responsible as it is a negligent artificial condition, but only Katie is liable, as the possessor of the land. D. No, it is a natural condition, and neither he nor Katie are liable for the flow of natural waters onto roads.

A. Yes. Benjamin created a nuisance, and he can be liable for discharging water on the road, but Katie is not. Alterations in land can create a nuisance, including concentrating the flow of water discharges on adjoining land.

Betty plans to purchase a cottage near a beach. She makes an offer to Steve, the realtor for the seller, on June 1, and Steve indicates the acceptance will come to Betty in the mail. The seller orally tells Steve to accept Betty's offer on June 2, and on June 4 Steve draws up the acceptance papers and has them signed by the seller. He mails the acceptance to Betty on June 5, and she receives it on June 7. In terms of contract formation, the acceptance of Betty's offer is effective on June Select one: A. 7. B. 5. C. 4. D. 2.

B. 5.

Hanna wrote a letter to Lucy offering to sell her computer to Lucy. Hanna ended her letter with, "If I do not hear from you by May 1, I will assume that you have accepted my offer." May 1 has passed. Lucy has not responded to Hanna. Which one of the following statements is correct regarding whether a legally enforceable agreement has been created? Select one: A. A legally enforceable agreement has been created, because the terms of the offer have been met. B. A legally enforceable agreement has not been created, because an offeree's silence is not acceptance.Correct. An offeree's silence is not acceptance for a legally enforceable agreement (absent prior dealings establishing a custom). C. A legally enforceable agreement has been created, but Lucy may cancel the contract later. D. A court has discretion to rule either way in this situation.

B. A legally enforceable agreement has not been created, because an offeree's silence is not acceptance.Correct. An offeree's silence is not acceptance for a legally enforceable agreement (absent prior dealings establishing a custom).

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. An implied-in-fact contract. B. An implied-in-law contract. C. A unilateral contract. D. An executory contract.

B. An implied-in-law contract.

The justification for imposing strict liability on those who carry on ultrahazardous activities is that they have for their own purposes created Select one: A. Tort liability for their acts. B. An unusual risk in the community. C. A normal risk for their community. D. Professional liability for their acts.

B. An unusual risk in the community.

Susan occasionally takes in dogs to care for that belong to people who go on trips. Before going on vacation, Anne left her poodle at Susan's house. Susan charged Anne $25 a day. After one week, Susan sold Anne's poodle to her friend, who purchased the poodle with the belief that it belonged to Susan. Anne loved her poodle and desperately wanted to get it back. As the bailor, which one of the following is the best available remedy for Anne? Select one: A. Anne can sue Susan's friend for the value of the poodle. B. Anne can recover her poodle from Susan's friend. C. Anne can force Susan to replace her poodle with another dog of equal value. D. Anne can sue Susan for the value of the poodle.

B. Anne can recover her poodle from Susan's friend.

Marty, a mover for Etchley's Moving and Storage, moved the Appleton family to their new home. While moving the Appleton's 1850 pine hutch cabinet, Marty accidently scratched the top. Although Etchley has a furniture repair person on staff, Marty used his own furniture sander to repair the scratch and damaged it further. The Appleton's believed that Marty had the experience and the authority to repair their hutch cabinet. What type of authority did the Appleton's believe Marty had? Select one: A. Express authority B. Apparent authority C. Implicit authority D. Implied authority

B. Apparent authority Apparent authority is authority that a reasonable person could believe that an agent has to act on a principal's behalf. It depends on the third party's reasonable belief, based on appearance that the principal has created that at the agent has authority.

Julieta went out to dinner with Hanna, her friend of several years. Hanna picked Julieta up and told her she had a bad headache and was nervous. Hanna subsequently took four tranquilizers, which Julieta knew to be an unsafe dosage, with a glass of wine. A few minutes later, Hanna drove into a grocery store badly injuring Julieta. Which one of the following is Hanna's best defense in a suit against her by Julieta? Select one: A. Contributory negligence B. Assumption of risk C. Negligent entrustment D. Guest statute

B. Assumption of risk

Upon termination of an agency relationship the principal must take appropriate action to inform third parties that the relationship has terminated to Select one: A. Give third parties an opportunity to file claims on any outstanding claims incurred but not reported. B. Avoid the operation of apparent authority. C. Allow insureds ample time to seek alternative coverage. D. Provide an opportunity for third party claimants to seek restitution under currently active claims.

B. Avoid the operation of apparent authority.

One of the ways to terminate agency is changed circumstances. Which one of the following is an example of changed circumstances? Select one: A. Causation B. Bankruptcy C. Reformation D. Accomplishment of contract

B. Bankruptcy

Amy was severely injured in an accident with a tractor trailer. She lived for two weeks following the accident amassing $200,000 of medical bills and other expenses related to the accident. It is likely that a lawsuit, under survival statutes, the $200,000 of damages will Select one: A. Not be awarded since Amy's death was not instantaneous. B. Be awarded in order to recover damages Amy sustained between the time of her injuries and the time of her death. C. Be awarded but only as the damages relate to Amy's medical expenses and not for other expenses. D. Not be awarded since she survived the accident for more than 10 days.

B. Be awarded in order to recover damages Amy sustained between the time of her injuries and the time of her death.

Margaret, who had been drinking all evening at a business meeting, signed and mailed a written offer to sell 1,000 shares of a particular stock to Frank which, unknown to her, would make Frank the majority shareholder in that company's stock. Frank was unaware that Margaret had been intoxicated at the time she formed the contract. Under these circumstances Margaret Select one: A. Can avoid the contract by asserting she did not understand the legal consequences of her acts. B. Cannot avoid the contract. C. Can avoid the contact by asserting she did not know she formed the contract. D. Can avoid the contract by claiming ignorance of the fact that Frank would become the majority shareholder.

B. Cannot avoid the contract. Margaret can attempt to avoid the contract but Frank can claim lack of knowledge of Margaret's condition and most likely the contract will be enforced.

Many of Carla's employees were injured at work, and Carla refused to improve the working conditions or comply with the Occupational Safety and Health Act (OSH Act). Carla believed that neither the OSH Act nor her state's workers compensation laws applied to her, because her business did not buy or sell goods across state lines. However, her business did indirectly affect the prices of goods in other states. Which one of the following best describes the penalties that Carla faces under the OSH Act? Select one: A. Carla loses the right to sue her employees for common-law damages and she could be fined. B. Carla faces civil and criminal penalties. C. Carla cannot be punished under the OSH Act because she does not affect interstate commerce. D. Carla could be sued by her employees to recover their medical expenses under the OSH Act.

B. Carla faces civil and criminal penalties.

The National Labor Relations Act (NLRA) has no definition of what constitutes the refusal to bargain. The NLRB and the courts have inferred a requirement that a representative of both sides meet at reasonable times and confer in good faith regarding wages, hours, and other employment conditions. The first question in determining good faith bargaining is whether Select one: A. The employer has conducted a concerted campaign to influence the workers. B. Collective bargaining is mandatory by law for the issue under dispute. C. The employer has made any threat of reprisal or has otherwise interfered with the collective bargaining process. D. Any employee benefits have been conferred by the employer while a representation election is pending.

B. Collective bargaining is mandatory by law for the issue under dispute.

Anna was recently diagnosed with a 95 percent blockage in an artery in her brain. She obtained life insurance coverage from Cromley's Life Insurance Company shortly after the diagnosis. Anna answered "no" to the questions on the life insurance application concerning preexisting conditions. She was aware the coverage might be rejected by Cromley if she shared the information about the probability of a stroke. If Anna dies from a stroke, which one of the following must Cromley Life Insurance Company prove to deny Anna's beneficiary's claim? Select one: A. Rescission B. Concealment C. Duress D. Material fact

B. Concealment

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 Select one: A. Avoidance. B. Concealment. C. Nondisclosure. D. Collusion.

B. Concealment.

Filip, an agent for Cintriell Insurance Company, wrote a health application on Jack who had a preexisting cancerous condition. This condition was listed under Cintriell's do not bind criteria. Which one of the following is an option that Cintriell's has concerning Filip's actions? Select one: A. Retrain Filip on binding authority guidelines for health insurance. B. Confirm the transaction. C. Approve Filip's authorized acts.I D. Suspend Filip's binding authority.

B. Confirm the transaction.

Luke and Elia are in a dispute over the meaning of a term in a service contract between them. Luke argues that 12 p.m. means 12 noon, and Elia says no, it means 12 midnight. Luke believes he is right because he was the drafter of the contract. They both found research indicating that it could go either way, depending on which convention is used. Which one of the following is the doctrine that a court would use to resolve this dispute? Select one: A. Divisible contract B. Contra proferentum C. Contradictory terms D. Intention of parties

B. Contra proferentum Contra proferentum, meaning "against the offeror." Ambiguous language is interpreted against the interests of its creator. This encourages parties to be as clear as possible when drafting contracts.

Which one of the following is an intentional civil wrong against property? Select one: A. Invasion of right of privacy B. Conversion C. Nuisance D. Assault

B. Conversion Intentional civil wrongs against property include trespass to real and personal property and conversion.

Which one of the following describes one of the types of decisions a corporation's board of directors makes? Select one: A. Election of members of the board of directors B. Decide the corporation's business policy C. Approve changes to the articles of incorporation. D. Manage the day-to-day business affairs of the corporation

B. Decide the corporation's business policy The Board of Directors makes two types of decisions: (1) it decides the corporation's structure and form, and (2) it decides its business policy.

In a negligence lawsuit, the plaintiff has the burden of proving all the elements of negligence, and the defendant has the burden of proving any Select one: A. Liability. B. Defense. C. Intervening acts. D. Applicable statutes.

B. Defense. The defendant is presumed at the outset of a lawsuit to have used due care until the plaintiff proves otherwise.

Manufacturer Tyler was in the welding business. Tyler tried to save money by "enhancing" the solder with an 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 Select one: A. Intended harm. B. Failed to use reasonable care. C. Materially misrepresented his product. D. Failed to warn of dangerous conditions.

B. Failed to use reasonable care. Failure to warn of dangerous conditions is not the primary issue in a negligence lawsuit.

Lucy offered her home for sale and told the prospective buyer, Tania, that the home built in 1923 was rewired in 2006. The home has not been rewired. Which one of the following elements of fraud is illustrated by this case? Select one: A. Unlawful mistake B. False representationCorrect. The first element of fraud is false representation, that is, a false statement of fact or opinion. C. Fraudulent information D. Detriment

B. False representation Correct. The first element of fraud is false representation, that is, a false statement of fact or opinion.

An agent that transacts all of a principal's business of a particular kind or in a particular place is a Select one: A. Broker. B. General agent. C. Soliciting agent. D. Special agent.

B. General agent.

Crystal owed Norman $400 when she sold a $1,000 piece of furniture to Lawrence. She asked Lawrence to pay her $600 and pay the remaining $400 to Norman. As a beneficiary under the contract between Crystal and Lawrence, Norman generally would Select one: A. Have the same rights as Crystal under the contract because of his role as a contract beneficiary. B. Have a right to enforce the contract. C. Be able to retain his rights even if Crystal and Lawrence attempted to eliminate his rights. D. Have no right to enforce their contract because he is not in privity to the contract.

B. Have a right to enforce the contract. In general, a beneficiary under a contract can enforce the contract unless the original parties agreed to eliminate or reduce the beneficiary's rights. Norman would not retain his rights if Crystal and Lawrence agreed to eliminate or reduce his rights. Generally the contract is enforceable.

Filip is a member of the Halbinger Corporation's Board of Directors. At a recent director's meeting, Filip and the other Halbinger directors learned that in the upcoming quarter, Halbinger would introduce a new product that would dramatically increase its profits. Filip bought a substantial amount of Halbinger stock the next day, based on this information. Filip's purchase was Select one: A. Proper, because Filip was not sure that the new product would increase Halbinger's stock price. B. Improper, because Filip bought this stock based on insider information. C. Proper, because the law does not regulate stock purchases by directors. D. Improper, because directors may not hold stock of companies on whose boards they serve.

B. Improper, because Filip bought this stock based on insider information.

West Virginia's state legislature believed that the federal Occupational Safety and Health Act (OSH Act) was not serving the state's citizens very well, so the legislature decided to assume exclusive jurisdiction of employee health and safety conditions within the state. To do this, the legislature issued a statement of intent, signed by the governor, denying the applicability of the OSH Act within the state. The legislature then passed a series of laws that created job safety and health programs that were more effective than those developed by the OSH Act. At this point, the West Virginia legislature's attempt to assume exclusive jurisdiction over employee health and safety is Select one: A. Competitive merely by issuing a statement of intent, signed by the governor. B. Incomplete because West Virginia still needs the approval of the Occupational Safety and Health Administration. C. Complete by creating laws that were at least as effective as those developed by the OSH Act. D. Not possible because states cannot preempt the federal OSH Act with their employee health and safety statutes.

B. Incomplete because West Virginia still needs the approval of the Occupational Safety and Health Administration.

Benny sold his copy shop to Yolanda and promised not to compete with her in a specific area for six months. Benny breached the provision and began to compete with Yolanda's business only two months later. Which one of the following actions would be most appropriate as an equitable remedy for Yolanda? Select one: A. Damages B. Injunction C. Specific performance D. Contract price

B. Injunction

A defense to libel or slander is the defendant's absolute privilege. Absolute privilege applies to which one of the following areas? Select one: A. Relative communications B. Injured party's consent C. City council communications D. News communications

B. Injured party's consent

The insurance broker represents the Select one: A. Insurer. B. Insurance customer. C. Insurance agency. D. Producer.

B. Insurance customer.

Julian was recently appointed the chief information security officer for Parker Financial. Having worked in the organization's information technology department for many years, Julian is fairly confident that the state-of-the-art technology will provide protection against data theft. He also feels that employees are well trained on legal requirements regarding the collection, use, and disclosure of financial information. Julian is concerned that the company lacks a culture of security and is susceptible to cybersecurity breaches from employee mistakes. Which one of the following practices should Julian initiate to help establish a culture of security? Select one: A. Julian should avoid bringing any attention to situations when data has been exposed. B. Julian should train employees on recognizing malicious emails and the precautions to take before connecting devices to public networks. C. Julian should expand the number of employees who can access personal data. D. Julian should provide all employees with a copy of the provisions of the Gramm-Leach-Bliley Act and advise them of the possibility of imprisonment.

B. Julian should train employees on recognizing malicious emails and the precautions to take before connecting devices to public networks.

In bailments for mutual benefit, the bailee can use the property Select one: A. Only to the extent necessary to preserve and protect it. B. Only as specified within the bailment agreement or contract C. In any way that has reasonably been contemplated by the bailor. D. In any way that is necessary to accomplish the mutual goal, as long as the bailee uses reasonable care.

B. Only as specified within the bailment agreement or contract

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 homeowner policy? Select one: A. Cian, because the policy was solely for his benefit B. KMC, as its interests appear. C. KMC, under the doctrine of equitable conversion D. KMC, because the policy was solely for its benefit

B. KMC, as its interests appear. Under the standard mortgage clause, insurance policy proceeds are payable to the mortgagee "as the mortgagee's interests may appear." Thus, KMC would receive the proceeds up to the amount of its loan and Cian would receive any remaining amount.

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? Select one: A. Louis is an employee of Aaron because the job will last for several weeks. B. Louis is an independent contractor because Aaron will exercise no control over how or when the job will be done. C. Louis is an independent contractor because he has been hired to do a specific job. D. Louis is an employee of Aaron because he is given Aaron's riding mower to use.

B. 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 form of misuse of legal process? Select one: A. Conversion B. Malicious prosecution C. Wrongful nuisance D. Alteration of court process

B. Malicious prosecution

The courts will not usually uphold an assignment when it Select one: A. Was created for the purpose of debt collection. B. Materially alters or varies the obligor's performance. C. Assigns the right to receive payment for the sale of goods to a third party. D. Results from the assignee's material misrepresentation.

B. Materially alters or varies the obligor's performance .Correct. If an assignment materially alters or changes the obligor's performance, the courts will not uphold the assignment. The assignee's representations do not affect the validity of an assignment. Courts will uphold assignments created for the purpose of debt collection or those used by a seller to assign the right to receive payment for the sale of goods to a third party.

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 Select one: A. Is required to settle any outstanding debts on Carlton's behalf. B. Must be certain that all bondholders are paid. C. Must consummate all related transactions through a committee of the bondholders.I D. Cannot be held liable if all payments due are not paid.

B. Must be certain that all bondholders are paid. When Carlton pays off his trust deed on the apartment building the trustee must be certain that all bondholders are paid and if not, the trustee is liable. The trustee may be held liable if all payments due are not paid. The trustee is not required to settle outstanding debt on Carlton's behalf.

person who enters a contract under duress may not have created Select one: A. Permission. B. Mutual assent. C. Valuable consideration. D. Acceptance.

B. Mutual assent.

Bob visits the town square on New Year's Eve for a celebration. While there, a scuffle occurs causing the crowd to surge forward. Bob is accidentally knocked down by Jim and suffers an injury to his arm. Soon after a police officer responding to the initial incident runs into and knocks Bob down, causing an injury to his knee. Does Bob have grounds for bringing action against Jim and the police officer for battery? Select one: A. No, because Jim can assert the defense of consent and the police officer can assert the defense of physical discipline. B. No, because the contacts by both Jim and the police officer were accidental and not intended to be hostile or offensive. C. Yes, because both Jim and the police officer did not exercise reasonable care in preventing injury to others by their actions. D. Yes, because the bodily contact by both Jim and the police officer was more than "incidental" and resulted in actual bodily harm.

B. No, because the contacts by both Jim and the police officer were accidental and not intended to be hostile or offensive.

Brenda offered to sell her collection of gemstones to Jolene for $25,000, and Jolene told her brother Kevin about Brenda's offer. When Jolene died in an auto accident, Kevin, as executor of Jolene's estate, tried to accept Brenda's offer to sell the collection. Kevin's acceptance on behalf of the estate is Select one: A. Not enforceable because the acceptance must be unconditional and unequivocal. B. Not enforceable because the offeror has the right to choose with whom to contract. C. Enforceable because of Brenda's intent to contract with Jolene. D. Enforceable since Kevin did not deviate from the original terms of the offer.

B. Not enforceable because the offeror has the right to choose with whom to contract.

Which one of the following is a category of the tort of nuisance? Select one: A. Nuisance invasion B. Nuisance per se C. Nuisance discomfort D. Unlawful nuisance

B. Nuisance per se

Which one of the following parties can decide whether to ratify the actions of an insurance agent who lacks the authority to bind the insurer? Select one: A. The state licensing authority B. Only the insurer C. Another licensed producer who has authority to bind the insurer D. Only the state insurance commissioner

B. Only the insurer

A restaurant encouraged its servers to tell jokes to entertain the customers. The owners believed that their male servers were funnier, and consequently paid them more than the female servers. In fact, the male servers did perform with more skill than the female servers, but the owners did not actually base their wages on anything more complicated than the sex of the server. Which one of the following best explains whether the restaurant owners have violated the Equal Pay Act? Select one: A. A wage differential is acceptable if it reflects the quality of work, regardless of the employer's actual reasons for setting wages. B. Payment of different wage rates is not allowed if sex is the employer's real basis for the wage differential. C. The act only applies to race, not to sex or gender, which is covered by other civil rights acts. D. The Equal Pay Act prohibits employers from paying different wage rates to different sexes for the same job, no matter the system implemented.

B. Payment of different wage rates is not allowed if sex is the employer's real basis for the wage differential.

Forest has contracted with a hat company, Company X, to buy hats so that he can supply 500 hats of a specific type, made only by Company X, to Company Z. Just one day before the delivery date, Forest learns that Company X has gone out of business and he will therefore not be able to supply the hats to Company Z. Forest cannot find the specified hats elsewhere in the marketplace, either. Company Z has sued Forest for breach of contract. Forest's duty to perform will be discharged because Select one: A. Forest could substitute a product of like kind and quality. B. Performance by Forest became objectively impossible. C. Forest could get a novation of his contract with Company Z. D. Performance by Forest became impracticable.

B. Performance by Forest became objectively impossible.

Many states provide a safe harbor to organization by waiving compliance with state notification laws if Select one: A. The items deemed as personally identifiable information change from one state to another. B. Personal information is encrypted C. A resident can rely on the laws of an adjacent state for compliance requirements and penalties. D. The organization advises individuals to report identity theft to appropriate law enforcement agencies.

B. Personal information is encrypted

Carolina, a lessee, leased business property from Millwright Property Management (MPM), a lessor. MPM had fire insurance through Pravalt Insurance Co. Carolina negligently caused a fire loss to the premises and Pravalt paid MPM for this loss. Pravalt then made a subrogation claim against Carolina. Carolina will have to reimburse Pravalt with her own funds, if Select one: A. The lease placed all risks of loss on MPM. B. Pravalt did not waive its subrogation rights against Carolina and she did not have separate insurance. C. Carolina was included as an additional insured on MPM's policy. D. Carolina had purchased a separate fire policy covering the leased premises.

B. Pravalt did not waive its subrogation rights against Carolina and she did not have separate insurance.

Environmental law deals with the maintenance and protection of the environment and includes measures to Select one: A. Create agencies to clean-up waste sites. B. Prevent environmental damage. C. Punish polluters. D. Reimburse victims of environmental abuse.

B. Prevent environmental damage.

Mike has been a commodities broker for 15 years and he has only recently incorporated his business. Mike's associate signed the formal incorporation application along with two other brokers. Mike's role in forming the corporation was to work to recruit the interest of others in organizing the corporation, obtain their cooperation and financing, and complete the legal and practical steps to create the corporation. In forming the corporation, Mike was the Select one: A. Corporate agent. B. Promoter. C. Principal. D. Incorporator.

B. Promoter .Correct. Mike was the promoter. A promoter is a person who creates a corporation. The promoter can be one or more persons, corporations, or paid organizations.

If a terminated agent provides what appears to be a valid auto insurance binder to an insurance applicant who subsequently has an accident, and the applicant has no knowledge of the agent's termination, it is likely that insurance coverage will be Select one: A. Denied due to the agent's contract termination. B. Provided by the insurer due to the apparent authority of the producer to bind coverage. C. Denied because no valid policy can be issued because the agent is an illegal representative of the insurer. D. Provided under the state guaranty fund which supports agency termination conflicts.

B. Provided by the insurer due to the apparent authority of the producer to bind coverage. The loss will likely be covered since the insured had no awareness of the agency relationship and acted upon the agent's apparent authority.

A corporation may reacquire issued securities by repurchasing them, which is known as Select one: A. Preemptive rights. B. Redemption. C. Reorganization. D. Liquidation.

B. Redemption.

The Patriot Act's implications for online privacy are significant. The act extends the government's ability to gain access to personal financial information and student information without any suspicion of wrongdoing. They simply certify that the information likely to be obtained is Select one: A. Used to deter and punish terrorists in the United States. B. Relevant to an ongoing criminal investigation. C. Significant and useful for national security purposes. D. Necessary to enhance law enforcement investigative tools.

B. Relevant to an ongoing criminal investigation.

Which one of the following is one of the six most significant types of unincorporated associations? Select one: A. Employer associations B. Religious organizations C. Lobbying associations D. Condominium renters' associations

B. Religious organizations

ich one of the following is a reason for agency termination? Select one: A. Date of contract B. Renunciation of authority C. Circumstances D. Distance

B. Renunciation of authority

Which one of the following is a notice sent by an insurer advising the insured that the insurer will continue with a claim investigation but that the insurer retains the right to deny coverage later? Select one: A. Justified refusal notice B. Reservation of rights letter C. Notice of election D. Nonwaiver agreement

B. Reservation of rights letter

Estoppel arises in insurance law from the following sequence of events: false representation of a material fact, reasonable reliance on that representation, and the Select one: A. Representation is true and accurate. B. Resulting injury or detriment to the insured. C. Resulting injury or damage to the insured. D. Resulting damage is an unbroken chain of events.

B. Resulting injury or detriment to the insured.

Gretchen owns 10 townhouses that she was using as rental property and now she intends to sell the units in separate transactions when the current leases expire. However, future buyers must agree to certain grounds-keeping regulations and other property maintenance requirements. These conditions set forth as terms of the contract of sale are typical of Select one: A. Variance modifications. B. Seller's restrictions on land use. C. Zoning restrictions. D. Profits à prendre.

B. Seller's restrictions on land use. In selling property, an owner can restrict its use to preserve or enhance the value of any land retained by the seller or to benefit the public. These are legally valid seller's restrictions on land use.

Which one of the following is generally the appropriate next step for an insurer that has identified a coverage question under the insured's policy and requested the insured to sign a nonwaiver agreement, but the insured has refused to sign the agreement? Select one: A. Pay the insured's claim B. Send a reservation of rights letter to the insured C. Inform the insured that the insured has breached the policy's cooperation clause D. Deny the insured's claim

B. Send a reservation of rights letter to the insured If the insured refuses to sign a nonwaiver agreement, the only way the insurer can protect itself against later claims of variance is to resort to the reservation of rights notice.

While Wanda was mowing her lawn, the lawn mower made a popping noise and suddenly exploded. Engine parts flew through the air and struck Wanda's grandfather in the eye. As a result of losing his vision, Wanda's grandfather, Homer, sued the lawnmower manufacturer. Homer's best approach in the lawsuit is to assert Select one: A. Intentional negligence in the manufacture of the lawnmower. B. Strict liability as a nonuser. C. Breach of warranty by the manufacturer. D. Imputed negligence using the foreseeability rule.

B. Strict liability as a nonuser.

NextCo, a national software company with 15 employees, decided to offset the cost of healthcare to the company by reducing the salaries of six elderly employees. Which one of the following best explains whether NextCo's actions violated the Age Discrimination in Employment Act (ADEA)? Select one: A. The ADEA only regulates companies that exclusively affect intrastate commerce. B. The ADEA only prohibits age discrimination by employers that have 20 or more employees. C. The ADEA only applies to government employers, either federal or state. D. The ADEA only bars age discrimination in hiring or firing employees, not setting salaries.

B. The ADEA only prohibits age discrimination by employers that have 20 or more employees.

Defenses to false imprisonment and false arrest for law enforcement officers include which one of the following for felonies? Select one: A. The arrest was made for a crime that was committed in a public place. B. The arrest was made without a warrant but the crime was committed in the officer's presence. C. The arrest was made without a warrant but the officer had a report of the crime from a citizen who was not involved in the crime. D. The arrest was made without a legally issued warrant.

B. The arrest was made without a warrant but the crime was committed in the officer's presence.

Grace was looking for a long-term personal hairstylist. Emily was actually an expert in men's hair and had no female clients. When Grace called, Emily thought Grace said her name was "Grant," and she assumed that Grace was a man. Emily truthfully told Grace that she was a renowned specialist and would be happy to enter into a long-term professional relationship. Grace asked Emily if she had experience working with clients who preferred especially short hair. Emily told Grace that she had, but Emily was referring to her male clients, and had never worked with short female hairstyles. Emily and Grace worked out the details of exclusive monthly haircuts without learning of their miscommunication. Which one of the following most accurately explains whether this contract is enforceable against both parties? Select one: A. The contract is voidable by Grace, due to Emily's fraudulent misrepresentations. B. The contract is voidable by Grace, due to Emily's innocent misrepresentations. C. The contract is voidable either party, due to Emily's unilateral mistake about Grace's gender. D. The contract is voidable by either party, due to their bilateral mistakes.

B. The contract is voidable by Grace, due to Emily's innocent misrepresentations.

In negligence, judges and jurors must weigh presumptions, facts, and the common law in order to determine the correct outcome for a particular case. Which one of the following best describes how a court will usually deal with a case when the facts are undisputed and point to only one presumption? Select one: A. The court must make findings of fact to determine whether negligence occurred. B. The court must decide whether, as a matter of law, negligence occurred.. C. When the facts point to only one presumption, the court must make findings of law to determine which party committed negligence per se. D. When the facts are undisputed, the court will always dismiss the case.

B. The court must decide whether, as a matter of law, negligence occurred..

FridgeCo, an appliance retailer, owned a storefront. The public sidewalk was damaged. A customer intent on purchasing a mini-frig got into an argument with the owner. The owner asked the customer to leave. The customer angrily stormed out and tripped on the broken sidewalk sustaining a fractured ankle. Which one of the following most accurately assesses FridgeCo's duties and liabilities concerning the customer, in most jurisdictions? Select one: A. The customer was a business invitee, so FridgeCo had a duty to exercise reasonable care to keep her safe B. The customer was a business invitee, but FridgeCo was not liable for defects in sidewalks. C. The customer was a trespasser, but FridgeCo had a duty to warn her of obvious dangers. D. The customer was an implied licensee who became a trespasser, so FridgeCo owed her no duty whatsoever.

B. The customer was a business invitee, but FridgeCo was not liable for defects in sidewalks. In most jurisdictions, landowners are not liable for defects in adjoining sidewalks or streets.n

Bailors and bailees have rights and duties related to property in bailment. The principal consideration in determining these rights and duties is Select one: A. The relationship of the parties. B. The identification of the intended beneficiary of the bailment. C. The nature of the property transferred. D. The commercial or non-commercial purpose of the bailment.

B. The identification of the intended beneficiary of the bailment.

Cases involving a producer's breach of the duty to follow insurer instructions arise in two areas. A common situation relates to an insurer's specific instructions to cancel, reduce, or otherwise limit coverage. This breach of duty also arises in situations involving Select one: A. Gross negligence. B. The improper use of binding authority. C. Advance premium payments on unissued policies. D. Invalid contracts.

B. The improper use of binding authority.

Which one of the following should be one of the most important criteria for a producer seeking to place insurance business? Select one: A. The types and variety of insurance products available B. The insurer's solvency C. The comparative cost of insurance among insurance market competitors D. The producer's reputation in the community

B. The insurer's solvency

Any contract allowing a lender more than the maximum legal interest is a usury contract and is therefore illegal. Which one of the following is true in most states if a lender is charging an illegally high rate of interest on a loan? Select one: A. The lender may collect the principal but is fined for usury action equal to the exorbitant rate of interest previously charged. B. The lender may collect the principal but is barred from collecting the interest. C. The lender may not collect either the principal or the lost interest. D. The lender may collect the principal and the lowest market interest rate.

B. The lender may collect the principal but is barred from collecting the interest.

Magnus, an agent for Insurance Company, received a call from Carla about orally binding coverage on her home at closing which was today. To be effective an agreement to insure must have, whether oral or written, which one of the following components? Select one: A. The amount of premium B. The object or premises if any to be insured C. The address of the agent's office D. The agent's name

B. The object or premises if any to be insured

A land contract is a type of interest in real property. Which one of the following statements about a land contract is true? Select one: A. The buyer obtains title at the outset of a land contract. B. The seller retains title under a land contract. C. Land contracts are not subject to the statute of frauds. D. Land contracts do not create insurable interests.

B. The seller retains title under a land contract.

All of the following are examples of defenses to defamation claims, EXCEPT: Select one: A. The statement had absolute or conditional privilege. B. The statement made by a news anchor was obtained from a reliable source. C. A retraction was printed soon after the statement was made. D. The statement regarding the plaintiff was literally true and accurate.

B. The statement made by a news anchor was obtained from a reliable source.

Sam held a rifle competition in which he required all entrants to agree to a written general release of liability. Competitor Ralph shot himself in the foot and he intends to sue Sam for damages relating to his injuries. Which one of the following statements relating to this incident is true? Select one: A. The written general release of liability only applies to third parties and since Ralph injured himself and not a third party, he has no cause in a lawsuit. B. The written general release of liability agreed to by Sam and Ralph could prevent a successful tort lawsuit. C. The written general release of liability generally would not prevent Ralph from suing Sam. D. Ralph contributed to the accident and therefore cannot recover any damages.

B. The written general release of liability agreed to by Sam and Ralph could prevent a successful tort lawsuit. A release operates as a legally binding contract between the parties.

Ruth told Eric that she will sell her inventory to him for $30,000. Eric responded to her offer saying, "Your price is ridiculous, but I must have the inventory. Enclosed is a check for $30,000, but I really think this is unfair." Which one of the following statements it true regarding whether there has been a legally enforceable acceptance of an offer to contract? Select one: A. There has been valid acceptance, but a court will have to determine Eric's intent. B. There has been valid acceptance, because complaining has no effect. C. There has been no acceptance, because an acceptance must be unequivocal. D. Acceptance cannot be determined, because Eric's protest created a conditional acceptance.

B. There has been valid acceptance, because complaining has no effect.

Jill's mother, Amy, contracted with Pete to sell him some lawn equipment for $600. Jill needed $200 for college textbooks so Amy asked Pete to give Jill $200 of the $600 he owed to her. Amy received $400 and Jill received $200. In this situation Jill is the Select one: A. Unintended donee. B. Third-party beneficiary. C. Promisor. D. Promisee.

B. Third-party beneficiary.

Charles is an insurance agent who represents Insurance Company (IC). IC instructed Charles to add a restrictive endorsement to a policy held by a large account that Charles had placed with IC. Charles ignored the instructions from IC because it was apparent that the account would object to the endorsement and that it might place his relationship with the account in jeopardy. IC suffered a large loss that would not have been covered if Charles had delivered the endorsement. Which one of the following duties to the insurer did Charles breach? Select one: A. To compensate IC for losses it sustained B. To faithfully follow IC's instructions C. To fully inform IC of his client relationship D. To keep his IC fully informed

B. To faithfully follow IC's instructions Producers must follow insurers' general statements of authority or specific directions.

Which one of the following is the best explanation for why an insurer would ask an insured to sign a nonwaiver agreement? Select one: A. To inform the insured that the insurer will deny coverage of any improper claims B. To prevent subsequent claims of waiver, estoppel, and election C. To establish grounds for a reservation of rights letter D. To alert the insured to a potential coverage problem

B. To prevent subsequent claims of waiver, estoppel, and election

Bobwell, Inc., was created as the owner and to manage a chain of restaurants. Bobwell's CEO decided to have the corporation purchase a chain of hardware stores instead of the restaurants. Which one of the following legal terms describes the corporation's actions? Select one: A. Mens rea B. Ultra vires C. Non compos mentis D. Res ipsa loquitor

B. Ultra vires

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? Select one: A. Under the hidden dangers doctrine, the homeowner can be liable for injuries to trespassers that occur in an unmarked artificial body of water. B. Under the attractive nuisance doctrine, the homeowner can be liable for injuries to trespassing children caused by his unsafe pool. C. Under the natural conditions immunity, the homeowner has no duty to warn trespassers of any danger on his land. D. Under the artificial conditions immunity, the homeowner is immune to liability because his property was clearly marked 'No Trespassing.'

B. Under the attractive nuisance doctrine, the homeowner can be liable for injuries to trespassing children caused by his unsafe pool.

Which one of the following types of insurance policies pays a stated amount, regardless of the actual value of the loss? Select one: A. Indemnity policy B. Valued policy C. Actual cash value policy D. Replacement cost policy

B. Valued policy A valued policy is one in which the insurer pays a stated amount in the event of a specified loss (usually a total loss) regardless of the actual value of the loss.

Vincent is an insurance agent representing Millstone Insurance. One Monday morning, he received a call from an insured advising him that she had been in an accident over the weekend. Joan told him that she had rear-ended another car, but no one was hurt. She said that other vehicle only had minor damage, and she sent the driver a check for $500 to cover the repair. Vincent said that was okay as long as no one was hurt. Eighteen months later, Millstone Insurance received notice of a lawsuit filed against Joan from the owner of the other vehicle. The suit claimed $3,500 in damage to the vehicle and $15,000 in medical expenses for the two passengers. Due to the amount of time that had passed since the accident, the insurer had little opportunity to locate witnesses and investigate the accident site. Millstone Insurance ended up settling the claim for $13,500. The insurer then filed a suit against Vincent, stating that it probably could have settled the claim for less than $5,000 if it had been notified about the accident when is happened. Which one of the following statements is correct regarding Vincent's liability to Millstone Insurance? Select one: A. Vincent is not liable to the insurer because he is a third party to the insurance contract between Joan and Millstone Insurance. B. Vincent is liable to the insurer for the difference between what it paid to resolve the claim and what it would have paid if he had provided prompt notification of the loss. C. Vincent is liable to the insurer for the full amount paid because he failed to properly transmit notification of the loss when he receive the call from Joan. D. Vincent is not liable to the insurer because Joan advised him that no one was hurt and only minor damage occurred.

B. Vincent is liable to the insurer for the difference between what it paid to resolve the claim and what it would have paid if he had provided prompt notification of the loss.

Which one of the following statements is true regarding warranties? Select one: A. Warranties can create a void contract, but only if the insured knew them to be deceitful. B. Warranties may be either material or immaterial and are part of the final contract. C. Warranties only need to be substantially true in order to be valid. D. Warranties are presumed to be immaterial, but their breach makes the contract voidable.

B. Warranties may be either material or immaterial and are part of the final contract. Whether or not they are material, the law will conclusively presume that they are material, and their breach makes the contract voidable.

Absent a specific expiration time, which one of the following represents when an offer ceases to be binding? Select one: A. When one year has elapsed after the original offer B. When a reasonable amount of time passes, based on considerations such as the contract's subject matter and the general commercial setting C. When a reasonable amount of time passes, based on how long it would take an average offeree to accept or reject the offer D. When the value of the offer's subject matter changes significantly

B. When a reasonable amount of time passes, based on considerations such as the contract's subject matter and the general commercial setting

Which one of the following statements correctly states the effect of consideration on whether waivers are binding under insurance law? Select one: A. All waivers are binding whether or not there is consideration B. No waiver is binding if there is consideration C. Some waivers are binding without consideration D. No waivers are binding without consideration

C. Some waivers are binding without consideration

Jennifer was injured in an auto accident and claimed that her medical expenses were $10,000, the physical therapy costs were $5,000, and her lost wages were $3,000. Additionally, she claimed $10,000 for pain and suffering. If a court awards Jennifer only special damages and denies any general damages, she will receive Select one: A. $10,000. B. $13,000. C. $18,000. D. $25,000.

C. $18,000.

In a lawsuit involving a vehicle accident, a court finds three parties partially at fault. The plaintiff John was 20 percent at fault, Carl, the other driver, was 70 percent at fault, while Bud City (the municipality) was 10 percent at fault. John proves damages of $100,000 and finds that Carl has no assets. Under the principles of comparative negligence and joint and several liability, how much would John be able to collect from Bud City? Select one: A. None of the damages. B. 10 percent of the damages. C. 80 percent of the damages. D. 100 percent of the damages.

C. 80 percent of the damages. Correct. John was only 20 percent at fault and therefore the remaining 80 of fault falls to the municipality since Carl has no resources.

Which one of the following correctly describes a bailee's right to limit liability for the bailed goods in the bailment contract? Select one: A. A bailee can only limit liability when the bailment is for the bailor's sole benefit. B. A bailee has an unlimited right to limit liability in a good-faith bailment contract. C. A bailee has a right to limit liability only for ordinary negligence, not for willful or wanton misconduct. D. A bailee can only limit liability when the bailment is for the bailor's and bailee's mutual benefit.

C. A bailee has a right to limit liability only for ordinary negligence, not for willful or wanton misconduct.

Betty Lou, who owes Hillary $300, sells a gem necklace to Jennifer for $600. Betty Lou receives $300 in cash and Jennifer's promise to pay $300 to Hillary to discharge Betty Lou's debt to Hillary. In this situation, Hillary is best described as Select one: A. An incidental beneficiary. B. A donee beneficiary. C. A creditor beneficiary. D. An intended beneficiary.

C. A creditor beneficiary.

Which one of the following statements is correct? Select one: A. A defendant cannot be held liable for both negligent entrustment and negligent supervision, because only negligent supervision involves the negligence of a third party. B. A defendant can be held liable for both negligent entrustment and negligent supervision, because negligent entrustment and negligent supervision are two names for the same legal concept known as the dangerous instrumentality doctrine. C. A defendant can be held liable for both negligent entrustment and negligent supervision when, for example, a parent defendant gives a child a dangerous article knowing that the child is likely to use it in an unreasonably risky manner, and the parent fails to exercise reasonable control over the child. D. A defendant cannot be held liable for both negligent entrustment and negligent supervision, as they are so similar, it is against public policy for courts to find a single defendant liable for both torts at the same time.

C. A defendant can be held liable for both negligent entrustment and negligent supervision when, for example, a parent defendant gives a child a dangerous article knowing that the child is likely to use it in an unreasonably risky manner, and the parent fails to exercise reasonable control over the child.

hich one of the following statements is true regarding producer liability? Select one: A. A producer is liable for any loss to the insurance customer resulting from an insurer's insolvency that the producer represents. B. A producer has no duty to inquirer into a prospective insurer's solvency on behalf of customers. C. A producer may be liable for negligently placing business with an insurer when the producer should have known of the insurer's insolvency D. A producer is prohibited from placing business with a nonadmitted excess and surplus insurer in the state.

C. A producer may be liable for negligently placing business with an insurer when the producer should have known of the insurer's insolvency

Luis leases a house from Daniel, the lessor. Luis, the lessee, is concerned about what would happen if he negligently burned down the premises. Which one of the following describes protection that may be available for Luis? Select one: A. Luis relies on protection afforded in the common law of tenancy. B. Daniel is listed as named insured on lessor's fire policy. C. A provision is included in the lease that makes the lessor financially responsible to pay for damage to the property. D. Lessor obtains a fire policy that includes the right to subrogation.

C. A provision is included in the lease that makes the lessor financially responsible to pay for damage to the property.

Which one of the following statements describes a scenario where an employer is likely to successfully use the employment-at-will doctrine as a defense to a wrongful discharge legal action? Select one: A. The employer has breached an implied contract of employment. B. The employer has breached an express contract of employment. C. A supervisor fired the employee because she did not approve of the employee's work ethic. D. The employment is subject to a collective bargaining agreement.

C. A supervisor fired the employee because she did not approve of the employee's work ethic.

Hal leases apartments to tenants for a specific lease period. Tenants may occupy the premises as Hal desires and Hal can require a tenant to leave at any time without advance notice. This is typical of Select one: A. An estate for years. B. A tenancy in the entirety. C. A tenancy at will. D. A periodic tenancy.

C. A tenancy at will.

Many producers are expanding their roles and offering more services to their customers. As they do, they approach the line separating the standard producer and customer relationship from the special or expanded relationship. Accordingly, insurance producers face a greater risk of liability for breach of the duty to Select one: A. Maintain coverage. B. Treat all customers equitably. C. Advise on insurance matters. D. Follow instructions.

C. Advise on insurance matters.

Nicolas applied for a homeowners policy with Etchley Insurance. Etchley's application asked if Nicholas' home had smoke detectors and he answered that it did. Etchley issued the policy and two years later, Nicholas' home was severely damaged by fire. During its claim investigation, Etchley discovered that although Nicholas did have smoke detectors in his home, they were not working at the time of the fire. If a court were to interpret Nicholas' application statement as a warranty, the court would most likely find it to be Select one: A. A promissory warranty. B. An implied warranty. C. An affirmative warranty.s. D. A continuing warranty.

C. An affirmative warranty Affirmative warranties state that specific facts exist at the time the contract forms. Affirmative warranties are less strict that continuing or promissory warranties, so courts will interpret warranties as affirmative unless policy language clearly provides otherwise. Implied warranties are obligations courts impose on sellers to warrant certain facts about their products.

Donative intent is one of the elements of a gift. Which one of the following describes donative intent? Select one: A. A donee's intent for a gift present or future B. A donor's intent for a gift present or future C. An intent to make a gift in the present D. A promise to make a future gift

C. An intent to make a gift in the present

Which one of the following best describes the reasonable person test to determine the standard of care in negligence cases? Select one: A. A subjective test based on how the jury members would have acted under like circumstances B. An objective test based on the average opinions of those with the defendant's characteristics, such as age, experience, capacity, and development C. An objective test based on how a theoretical reasonably cautious person would act under the circumstances D. A subjective test based on the defendant's presumably reasonable personal judgment

C. An objective test based on how a theoretical reasonably cautious person would act under the circumstances The reasonable person test is an external, objective test under which the defendant's individual or personal judgment, or that of other parties involved, is not considered. The test is based on how a jury perceives that a reasonable person would have acted.

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.

C. At the time of loss

Martha promised to sell her car to Tim who promised to pay $10,000 on June 1. On May 15, Tim said to Martha, "I cannot afford that car, and I will not buy it from you." Tim's statement is a Select one: A. Contract novation because of a change of circumstances. B. Rescission since he wishes to invalidate the offer to purchase Martha's car. C. Breach of contract by anticipatory repudiation. D. Failed repudiation of the contract since agreement was bilateral and mutual.

C. Breach of contract by anticipatory repudiation. Correct. Tim's statement is a breach of contract by anticipatory repudiation and Martha does not need to wait until June 1 but may sue Tim immediately for damages for breach of contract. Tim did not alter the contract or rescind it but he has breached the contract through his stated unwillingness to comply with contract terms.

While driving the family car, 19-year-old Susan hit a pedestrian, causing severe injuries to the pedestrian. The uninsured pedestrian sued Susan's parents for damages. The liability concept or doctrine that exists in some states and that most applies to this situation is which one of the following? Select one: A. Alternative liability B. Absolute liability C. The family purpose doctrine D. Tortfeasor's capacity

C. The family purpose doctrine

Which one of the following best describes the nature of the agency relationship, if any, between insurers and brokers? Select one: A. Brokers typically do not work for insurers, but they may become agents of an insurer if they consistently recommend one particular insurer to their clients. B. Brokers act as intermediaries between insurers and insureds, and as such, their authority to act on behalf of insurers is strictly limited by contract. C. Brokers act as agents for insurance customers, not insurers, and they have no authority to act on behalf of insurers. D. Brokers transact all of an insurer's business of a particular kind or in a particular place, and brokers may work for several insurers.

C. Brokers act as agents for insurance customers, not insurers, and they have no authority to act on behalf of insurers.

Elida organized a canoe race and contracted with Xavier to supply the canoes the morning of the race. When Xavier failed to deliver the canoes when promised, Elida was required to refund entry fees to the ten participants in the race. This loss of the entry fee money is an example of which one of the following types of damages? Select one: A. Punitive damages B. Compensatory damages C. Consequential damages D. General damages

C. Consequential damages Consequential damages are awarded by court to indemnify injured parties for losses that result indirectly from a wrong, such as a breach of contract as in this situation.

When the insurance policy wording is ambiguous, a court generally applies the interpretation that favors the insured. This is because the insurance policy is a Select one: A. Contract of material fact. B. Contract of indemnity. C. Contract of adhesion D. Contract of unequal amounts.

C. Contract of adhesion

Susie agreed to sell grocer Marcus 1,000 jars of jelly for a total price of $2,000. Marcus breached the contract, and Susie had to find an alternate buyer. She found one who would purchase the jelly for $1,500. Susie, therefore, lost $500 because of Marcus' breaching their contract of sale. Susie has which one of the following remedies available for this breach of contract? Select one: A. Contract price B. Injunction C. Damages D. Specific performance

C. Damages Damages, as a remedy, are available if a seller appropriately resells the goods and receives less than the contract price

A gift requires which one of the following elements? Select one: A. Donor comment B. Dominion C. DeliveryCorrect. D. Burden of ownership

C. Delivery

Rin applied for auto insurance with Jancy Insurance. Jancy's application asked about any youthful drivers in Rin's household. Rin said there was one youthful driver living with her but in fact there were two, each with excellent driving records. Jancy issued the insurance policy and it would also have issued the policy had it known about both youthful drivers. If Jancy ultimately learns about Rin's incorrect application statement, it should Select one: A. Avoid Rin's policy because of her intent to deceive. B. Avoid Rin's policy due to her material misrepresentation. C. Do nothing because Rin's misrepresentation was not material.Correct. The test of materiality is whether the policy would have been issued had the applicant told the truth. In this case, the policy would have been issued. D. Do nothing because Rin's misrepresentation was unintentional.

C. Do nothing because Rin's misrepresentation was not material. Correct. The test of materiality is whether the policy would have been issued had the applicant told the truth. In this case, the policy would have been issued.

If the subject matter of an offer is destroyed before acceptance, then the offer terminates Select one: A. Due to a lapse of time, at the moment of destruction. B. Due to a lack of intent to contract, at the moment the offeror learns of the destruction. C. Due to the operation of law, at the moment of destruction. D. Due to indefinite terms, at the moment the offeree learns of the destruction.

C. Due to the operation of law, at the moment of destruction.

Maria is an insurance agent who represents Three Hills Insurance. By agreement between the two parties, Maria has the authority to bind up to $1 million in property coverage on businesses that fall within specific territories and classes of business. She has never bound coverage outside of the specific territories and classes of business. However, Maria does occasionally bind coverage limits that are 5-10% above her authority level. Which one of the following duties to the insurer has Maria breached? Select one: A. Duty to transmit information properly B. Duty to disclose risks C. Duty to follow instructions D. Duty of loyalty and accounting

C. Duty to follow instructions

Which one of the following is true regarding unincorporated associations? Select one: A. The associations can hold and transfer real property. B. Members can participate directly in day-to-day management. C. Each member is individually liable for the association's activities. D. An association is a valid, separate legal entity.

C. Each member is individually liable for the association's activities.

Emilia's state hired Emilia, a musician, to create a theme song for the state's public school system. Two disputes between the parties eventually led them to court. First, the contract called for Emilia to be paid $12,000, but the state actually paid Emilia in bonds worth $12,000. Second, the contract was unclear about the length of the theme song. It said that the song had to be "of length no less than thirty (60) seconds," and the parties could not agree whether 30 seconds or 60 seconds was correct. Using the established guidelines of contract construction, which one of the following is the court most likely to determine? Select one: A. Emilia can be paid in bonds, and the song must be at least 30 seconds long. B. Emilia can be paid in bonds, and the song must be at least 60 seconds long. C. Emilia must be paid in cash, and the song must be at least 30 seconds long. D. Emilia must be paid in cash, and the song must be at least 60 seconds long.

C. Emilia must be paid in cash, and the song must be at least 30 seconds long. Words prevail over numbers.

Agency termination occurs upon a principal's death Select one: A. When the death certificate has been signed by the coroner. B. When notification of the principal's death is posted in the local newspaper. C. Even though the agent or third party has no actual notice of death D. When the death certificate is presented by the principal's estate.

C. Even though the agent or third party has no actual notice of death

Which one of the following statements is true regarding Executive Order 11246 and employers with government contracts? Select one: A. Executive Order 11246 requires state government contracts to include specific nondiscrimination provisions. B. Executive Order 11246 excludes state government contractors from the federal civil rights acts. C. Executive Order 11246 mandates affirmative action plans for federal contractors and subcontractors. D. Executive Order 11246 prohibits all government contractors from hiring illegal aliens.

C. Executive Order 11246 mandates affirmative action plans for federal contractors and subcontractors.

Under Ella's will, Fatima received a life estate in a house located at 1 Salem Street and Harry received a remainder interest in the property. Fatima lived in the house but did not obtain property insurance. The house was destroyed in a windstorm. Harry sued Fatima for failing to have obtained adequate insurance on the property. The court will decide this lawsuit in favor of Select one: A. Harry, because he had an insurable interest in the property. B. Harry, because life tenants are obligated to protect the interests of remainder persons. C. Fatima, because she was not obligated to obtain insurance. D. Fatima, because she had no insurable interest in the property.

C. Fatima, because she was not obligated to obtain insurance. Generally, in the absence of specific provisions to the contrary, life tenants are not required to insure premises for the remainder person's benefit. Both Fatima and Harry had insurable interests in the property, but this didn't obligate Fatima to obtain insurance.

Which one of the following acts prohibits payments to foreign officials to obtain or keep business and also requires companies who list their securities in the United States to meet certain accounting provisions? Select one: A. Electronic Communications Privacy Act B. Foreign Intelligence Surveillance Act C. Foreign Corrupt Practices Act D. Money Laundering Control Act

C. Foreign Corrupt Practices Act

Mansion owner Mary, who is 85 years old, hired Larry to make a small repair to a window sash and wrote him a check for $80. Larry then modified the check to show the amount as $180 because he felt that Mary could afford it and that the repair was more complicated than he had expected. Larry is guilty of Select one: A. Material misrepresentation. B. Violation of the parol evidence rule. C. Fraudulent alteration.Correct. D. Contract novation.

C. Fraudulent alteration.Correct.

A city announced that a celebrity was going to perform in the park on a specific day. Kathy rented a park gazebo to be certain that she and her son could see the celebrity. She was charged an inflated price because this was a special event. The celebrity was injured in an auto accident before the event and had to cancel the performance. Kathy's contract with the park for the gazebo rental could possibly excuse Kathy's performance of the contract because of Select one: A. No accord or satisfaction. B. Partial performance. C. Frustration of purpose.Correct. The contract with the park was useless to Kathy since the original purpose for the rental was frustrated because the celebrity was not there. Frustration of purpose can discharge a contract that is possible to perform, when a supervening event destroys the propose or value of the contract, provided that both parties are aware of that purpose or value. D. Commercial impracticability.

C. Frustration of purpose. Correct. The contract with the park was useless to Kathy since the original purpose for the rental was frustrated because the celebrity was not there. Frustration of purpose can discharge a contract that is possible to perform, when a supervening event destroys the propose or value of the contract, provided that both parties are aware of that purpose or value.

ABC Company manufactures hot beverage containers and distributes them to various retail outlets. A customer who purchased one of these containers at a retail store is burned by hot coffee after the lid on a container falls off. Which one of the following principles of law would be the basis for a suit brought by the injured party? Select one: A. Misrepresentation B. Express warranty C. Implied warranty D. Assumption of risk

C. Implied warranty Implied warranty is an obligation that the courts impose on a seller to warrant certain facts about a product even though not expressly stated by the seller.

Juan's Accounting wants to upgrade its software program. It has been working with Jane's Software Company to select the upgrades that will meet its business needs and Juan's Accounting is ready to make an offer. Which one of the following sets of elements must be included to constitute a legal offer? Select one: A. Legal purpose, period of time the offer is valid, and acceptance terms B. Period of time the offer is valid, acceptance options, and intent to contract C. Intent to contract, definite terms, and communication to the offeree D. Legal purpose, definite terms, and options for the offeree

C. Intent to contract, definite terms, and communication to the offeree

Sebastian applied for homeowner insurance with Blithe Insurance. Blithe's application asked if Sebastian had any damage to his house within the last three years. Sebastian had two losses four years ago but none in the last three years so Sebastian answered "no" to this question. Blithe issued the homeowner policy. Which one of the following statements about Sebastian's response to the application question is true? Select one: A. It was a warranty B. It was a misrepresentation C. It was neither a warranty nor a misrepresentationCorrect. Sebastian gave an accurate answer to Blithe's question. He made no misrepresentation. Sebastian's statement would not be interpreted to be a warranty. It was not an opinion—it was a statement of fact. D. It was an opinion

C. It was neither a warranty nor a misrepresentation Sebastian gave an accurate answer to Blithe's question. He made no misrepresentation. Sebastian's statement would not be interpreted to be a warranty. It was not an opinion—it was a statement of fact.

Jessica visited the playground of her childhood. While climbing high on the monkey bars, she fell and suffered a concussion. Which one of the following must the city that owned the playground show that Jessica did in order to claim the defense of assumption of risk? Select one: A. Jessica had no opportunity to avoid the risk. B. Jessica did not knowingly assume the risk. C. Jessica voluntarily chose to incur the risk D. Jessica had partial knowledge of the risk.

C. Jessica voluntarily chose to incur the risk

Allison sued George for breach of contract and the term "contractual consideration" was at issue. In court, the term would be given its Select one: A. Technical meaning. B. Common usage meaning. C. Legal meaning. D. Dictionary definition.

C. Legal meaning.

Even though Sandy's original employment contract said that she was hired "at will," her boss, Melissa, made subsequent oral promises that Sandy would not be terminated without good cause. Which one of the following describes how, in most jurisdictions, if a court found that Melissa created an implied contract with Sandy by making these promises, Melissa's power to terminate Sandy would be affected? Select one: A. Melissa would be liable for wrongful discharge if she terminated Sandy without good cause B. Melissa would still be free to terminate Sandy for any reason or no reason because of the employment contract. C. Melissa would be liable for breach of contract if she terminated Sandy without good cause. D. Melissa would still be free to terminate Sandy for any reason or no reason because of the employment-at-will doctrine.

C. Melissa would be liable for breach of contract if she terminated Sandy without good cause. Oral communications can create an implied contract not to discharge employees despite the existence of either the traditional doctrine of employment at will or a previous express, written employment agreement.

Patty bought a particular brand of windows because they were warranted free of defect for the lifetime of the purchaser. If anything happened the windows were guaranteed to be replaced at no cost to the original owner. Six years later, two of the windows began to fog between the panes. Patty had them replaced and was billed $600 for labor and materials. Patty sued the window company stating she would not have purchased them except for the future no-cost guarantee. Patty's best basis for the lawsuit is Select one: A. Negligence. B. Implied warranty of merchantability. C. Misrepresentation. D. Absolute liability.

C. Misrepresentation. Had Patty known she would be charged for repairs, she would not have originally contracted for the windows. The company is guilty of misrepresentation.

If a valid agency contract does not support termination of the agency relationship and the insurer revokes a producer's authority to act on the insurer's behalf and the agency relationship terminates, the producer Select one: A. Takes ownership of all policy expirations and retains exclusive rights to policy renewals. B. Has a minimum of one year to continue representation. C. Must immediately discontinue representation of the insurer. D. May appeal the insurer's decision to the National Association of Insurance Commissioners (NAIC).

C. Must immediately discontinue representation of the insurer.

Is there any way that an offeree can accept a rejected offer to contract? Select one: A. No, the offeree can only invite the offeror to make the original offer again, at which point the offeree can once again either accept or reject the offer. B. Yes, provided that the original offer has not yet lapsed. C. No, a rejected offer is terminated and any attempt to accept the rejected offer is considered a new offer. D. Yes, provided that the offeror did not rely on the offeree's rejection.

C. No, a rejected offer is terminated and any attempt to accept the rejected offer is considered a new offer.

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

C. Nonessential terms

Andrew promised Katy he would roof her house on October 30. On October 15, Andrew told Katy he could not find the correct shingles and stated he was probably going to be too busy to do the job. Andrew has Select one: A. Voided the contract. B. Rescinded the contract. C. Not repudiated the contract. D. Breached the contract.

C. Not repudiated the contract. A repudiation of a contract is the refusal to meet obligations under the contract, but it must be positive and unequivocal to constitute a breach. Andrew's statement of inability to perform in the future is not repudiation. Katy cannot sue for breach of contract until October 30 has arrived, and Andrew has failed to roof her house.

Natica hired Judy to provide housekeeping services. In exchange, Natica would pay Judy $450 a month for 12 months of service. Subsequently, Judy was injured in a car accident and was prevented from being able to provide housekeeping. Judy asked Carol if she would provide the housekeeping for the balance of the term. Natica and Carol agreed to the change. Under which one of the following legal concepts has Judy been discharged from her contract? Select one: A. Substantial performance B. Impossibility C. Novation D. Incapacity

C. Novation

In a class action lawsuit involving an insurer's claim practices, the court must consider the elements of Select one: A. Intentionality, commonality, extent of harm, and venue of the defendant. B. Extent of harm, numerosity, commonality, and venue of plaintiffs. C. Numerosity, commonality, typicality, and adequacy of representation. D. Functionality, commonality, adequacy of representation, and number of plaintiffs.

C. Numerosity, commonality, typicality, and adequacy of representation.

Julian, an agent with Wokey Insurance Company, has been instructed not to write vehicles with three wheels on a personal auto policy. Julian's agent duty to Wokey is called Select one: A. Care. B. Accounting. C. Obedience. D. Adherence to the guidelines.

C. Obedience.

A partner who has retired could have obligations to third party creditors. To be relieved of these obligations, the retiring partner must Select one: A. Pay those debts he/she initiated on behalf of the partnership. B. Pay his/her pro rata portion of the debt owed to the third party creditor. C. Obtain the third party's creditor's agreement to obtain payment only from the remaining partners. D. Obtain a debt release from the existing partners.

C. Obtain the third party's creditor's agreement to obtain payment only from the remaining partners.

Which one of the following best explains why nonwaiver agreements and reservation of rights letters must typically be in writing? Select one: A. Oral insurance contracts are not permitted in some states. B. Most insurance policies require such agreements to be in writing. C. Oral notice is too difficult to prove. D. Written documents are easier to create and transmit in a timely fashion.

C. Oral notice is too difficult to prove.

Trespass can be described as an act against possession and not against Select one: A. Personal property. B. Plaintiff possession. C. Ownership. D. Tenant possession.

C. Ownership.

Abby has invented a new media storage device and wants to have exclusive use and control of her new invention. To do this, Abby needs a Select one: A. License. B. Copyright. C. Patent. D. Trademark.

C. Patent.

In general, which one of the following does the Foreign Corrupt Practices Act prohibit? Select one: A. Aggressive monopolistic tactics in international business B. Manipulation of the stock prices of foreign subsidiaries C. Payments to foreign officials to obtain or keep business D. Price-fixing with in foreign markets

C. Payments to foreign officials to obtain or keep business

Which one of the following is an equity security that is generally nonvoting but has priority over common stock, usually regarding dividends and capital distribution if the corporation ends its existence? Select one: A. Debt security B. Stock option C. Preferred stock D. Bond

C. Preferred stock

Which one of the following is an agent appointed to vote a stockholder's shares in the stockholder's absence? Select one: A. Quorum B. Voting trust C. Proxy D. Director

C. Proxy

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. As an association director, Ralph has legal rights and duties that differ from those of a corporate director. B. Ralph, as a member of the fraternal association, has no property rights in the association's assets. C. Since Ralph receives no compensation, his standard of care owed to the association is less than that of a compensated 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.

C. Since Ralph receives no compensation, his standard of care owed to the association is less than that of a compensated corporate director.

The type of insurance agent who derives all powers and duties directly from the agency contract is the Select one: A. Special agent. B. Broker. C. Soliciting agent. D. General agent.

C. Soliciting agent. An insurance producer whose authority is limited by contract with an insurer to soliciting applications for insurance and performing other acts directly incident to those activities is a soliciting agent.

Which one of the following was most likely an employer/employee relationship? Select one: A. Lucas was an attorney who was recently hired by Fatima on a retainer basis. B. Yusuf, a subcontractor, had his own plumbing business. He set his own hours and recently contracted a job with Millwright Builders. C. Sota, a homeowner, hired Seymour, a roofer, to repair his roof. Sota provided the tools and materials and paid Seymour by the hour and set his hours. D. Kristian operated a watch repair shop in Taunton's Department Store. Kristian is a skilled watchmaker and is not paid by Taunton's.

C. Sota, a homeowner, hired Seymour, a roofer, to repair his roof. Sota provided the tools and materials and paid Seymour by the hour and set his hours.

Which one of the following statements is true regarding the role of state and federal regulation of corporations that operate in multiple states? Select one: A. If incorporated in Delaware, other states in which the business operates may not apply their individual state statutes. B. To operate in more than one state, a business would need a federal charter. C. State laws govern corporation formation, but interstate commerce would be subject to federal law. D. While state laws do not grant the rights to a corporation to operate in another state, federal law does.

C. State laws govern corporation formation, but interstate commerce would be subject to federal law.

Which one of the following reinforces the principle of indemnity? Select one: A. Replacement cost policy B. Special limits C. Subrogation D. Valued policy

C. Subrogation

Which one of the following effects did the Foreign Corrupt Practices Act (FCPA) initially have on U.S. companies' ability to compete with foreign companies in foreign markets? Select one: A. The FCPA helped U.S. companies by punishing foreign companies caught making corrupt payments outside of the U.S. with fines and sanctions. C. The FCPA prohibited U.S. companies from paying bribes, but because foreign companies could still pay bribes without consequence, U.S. companies operated at a strategic disadvantage. D. The FCPA hurt U.S. companies by increasing the cost of doing business in local markets.

C. The FCPA prohibited U.S. companies from paying bribes, but because foreign companies could still pay bribes without consequence, U.S. companies operated at a strategic disadvantage.

Which one of the following acts was enacted by Congress as a reaction to the terrorist attacks on the World Trade Center in New York City and the Pentagon in Washington, D.C., on September 11, 2001? Select one: A. The Electronic Communications Privacy Act B. The Foreign Intelligence Surveillance Act C. The Patriot Act D. The Foreign Corrupt Practices Act

C. The Patriot Act

Greatview Hotel has two locations in the state of Colorado. The nature of the hotel business requires that it rely on electronic information and process a large volume of credit card transactions. Several competitors have suffered from data security breaches. Greatview Hotel has decided to hire Emily as a chief information security officer. The expectation is that Emily will develop a program that will meet state regulations, earn customers' confidence, and protect the brand. Which one of the following data protection acts or standards should be part of Emily's program? Select one: A. The Federal Information Security Management Act (FISMA) of 2002 B. The Computer Fraud and Abuse Act C. The Payment Card Industry Data Security Standard (PCI DSS) D. The Gramm-Leach-Bliley Act

C. The Payment Card Industry Data Security Standard (PCI DSS)

In an attempt to improve school spirit, ABC College organized a "Dean Clown" initiative. If the whole student body finished the school year with sufficiently high grades, then the dean would dress like a clown for an entire semester. To affect this scheme, ABC College entered into a contract with the dean. Under the contract, ABC College promised to increase the dean's annual salary by two percent, and the dean promised to participate in the College's plan. The dean also agreed to forfeit his entire salary for five years if he breached the contract. But when the time came, the dean refused to play along and further refused to forfeit his salary. Which one of the following best describes the enforceability of this contract? Select one: A. The agreement is completely unenforceable, because it was made for an unlawful purpose—that is, to commit a tort against the dean. B. The agreement is completely unenforceable, because it is a wagering contract. C. The contract is enforceable except for the salary forfeiture provision, which is unconscionable. D. The contract is an in pari delicto agreement, and, as such, is completely enforceable, because both parties are equally at fault.

C. The contract is enforceable except for the salary forfeiture provision, which is unconscionable. Courts do not enforce contracts containing provisions so harsh and unfair that they cause undue suffering to the party resisting performance.

Which one of the following can be held liable under both tort and criminal law for an action taken on behalf of a corporation? Select one: A. Only the corporation's Board of Directors B. Only the person who committed the act C. The corporation, its directors, and its officers D. The person committing the act and the corporation's management

C. The corporation, its directors, and its officers

Georgia just moved from one state to another and contacted an insurance agent for homeowners coverage. She told her agent that she previously had full coverage and she wanted the same coverage on her new home and contents. The agent assured her she would have full coverage and issued Georgia a binder with a note on it saying "full coverage as in previous state." A year later, Georgia's home experienced water damage and she was denied coverage because she did not have a back-up of sewer and drain endorsement that she had on her previous policy. If Georgia sues her insurer, it is likely Select one: A. She will be denied coverage because she did not carry the endorsement. B. That the meaning of the binder cannot be determined even by application of all the rules of interpretation under UCC provisions. C. The courts will interpret the binder note in Georgia's favor because of ambiguous wording of full coverage and her intent to have the same coverage as she had in her prior state. D. She will not be able to use the binder to introduce evidence against the insurance contract because of the parol evidence rule.

C. The courts will interpret the binder note in Georgia's favor because of ambiguous wording of full coverage and her intent to have the same coverage as she had in her prior state. The courts will allow admission of the binder and will most likely interpret the binder note in Georgia's favor because of the agent's ambiguous wording of full coverage and because of Georgia's intent to have the same coverage as she had in her prior state. Georgia thought she had the same coverage which would have included the endorsement and she will be allowed to submit the binder for contract interpretation purposes.

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? Select one: A. Insurance contracts should not pay more than losses incurred. B. Parties to insurance contracts must be honest with each other. C. The insurer writes the insurance policy so the insured must "take or leave" the policy. D. The parties to the insurance contract must perform certain conditions.

C. The insurer writes the insurance policy so the insured must "take or leave" the policy. The insurer drafts the wording of the insurance contract and has the opportunity to make its language clear. If it does not, the courts will resolve ambiguous policy provisions in the insured's favor.

Larry is a new agent for Pure Insurance Company, which does not write wind and hail coverage for homes on the beach. Larry must write the risk through the wind and hail pool. Larry bound coverage on a house that was on the do-not-bind list for wind and hail. There was a wind loss. Ratification by the wind and hail pool must meet which one of the following conditions? Select one: A. The purported agent must identify the principal to act for someone. B. The principal must review the material facts before the ratification is binding. C. The principal must ratify the agreement before the third party elects to withdraw from the agreement. D. The principal must ratify the favorable parts of the transaction.

C. The principal must ratify the agreement before the third party elects to withdraw from the agreement.

arolina was a counterfeiter. She sought a property insurance policy on the warehouse where her counterfeiting operations took place, as well as a business interruption insurance policy on the operations themselves. Both Carolina and her insurance producer believed that these policies would be valid and enforceable. They also both incorrectly believed that the property insurance policy covered lightning strikes. Lightning was extremely rare in Carolina's area and had never caused damage to any buildings in the past. Which one of the following statements is true? Select one: A. The property policy is voidable by either party, and the business interruption policy is void. B. Both policies are void because they involve the coverage of illegal activities. C. The property policy is enforceable, and the business interruption policy is void. D. Both the property insurance policy and the business interruption policy are voidable by either party.

C. The property policy is enforceable, and the business interruption policy is void. Insurance contracts must involve legal subject matter. But if the insurance is only incidental to an illegal purpose, then the contract is enforceable.

Which one of the following rights is assignable under the general rule of contract law? Select one: A. The right to receive workers compensation benefits B. The right to assign personal duties C. The right to sue for damage for property loss or damage D. The right to receive veteran disability benefits

C. The right to sue for damage for property loss or damage

Which one of the following statements describes duress in contract law? Select one: A. The use of improper power or trust to deprive a person of free will causing them to enter into a contract B. The aggressive assertion of one's legal rights C. The use of restraints, violence, or threats of violence to cause the party to enter into a contract D. The use of persuasion of the other to cause the other to enter into a contract

C. The use of restraints, violence, or threats of violence to cause the party to enter into a contract

What is a characteristic of a joint venture? Select one: A. Income taxes are filed jointly versus individually. B. The duties are shared based on percentage of ownership. C. They may be formed to conduct a single transaction. D. Estoppel occurs when one of the partners retires.

C. They may be formed to conduct a single transaction.

Any agreement entered into by an insane person is void. Which one of the following classes of insane people does the law recognize for purposes of contractual liability avoidance? Select one: A. Those judged insane by a physician B. Those judged mentally incompetent by a physician C. Those adjudged insane by a court D. Those judged temporarily insane

C. Those adjudged insane by a court

On June 1, Tobias mailed a signed offer to Emilia to purchase her set of antique ivory forks. The offer stated that it was open for one week. Emilia received the offer on June 4, thought the price was fair, and signed her name on the offer to indicate her acceptance. On June 6, Emilia died. The executor of Emilia's estate found the offer with Emilia's signature of acceptance on June 7 and mailed it to Tobias that day. On June 8, a law went into effect that prohibited the sale of ivory in any form from that day forward. Tobias received the signed offer on June 10. Which one of the following best explains why Tobias and Emilia do not have an enforceable contract? Select one: A. Tobias's offer lapsed because he did not receive Emilia's acceptance before June 8. B. Tobias's offer terminated as an operation of law upon the passage of the June 8 law. C. Tobias's offer lapsed because Emilia did not communicate her acceptance before June 8. D. Tobias's offer terminated as an operation of law when the executor took charge of Tobias's estate.

C. Tobias's offer lapsed because Emilia did not communicate her acceptance before June 8. Tobias's offer lapsed because Emilia did not communicate her acceptance before June 8. An estate cannot accept the pre-death offer.

Anthony, Bob, and Mary got into a violent argument and accidentally destroyed Anthony's valuable vase, worth $10,000. Anthony was 20 percent at fault, Bob was 10 percent at fault, and Mary was 70 percent at fault. They are not in a combined fault state. In a lawsuit where Anthony is the plaintiff and Bob and Mary are defendants, which one of the following statements is true? Select one: A. Under the 49 percent rule, Mary would have to pay $7,000. B. Under the 50 percent rule, Bob and Mary would have to pay $10,000 total. C. Under the 49 percent rule, Mary would have to pay $8,000. D. Under the 50 percent rule, Bob and Mary would have to pay $4,000 each.

C. Under the 49 percent rule, Mary would have to pay $8,000. Because Anthony's percent of fault exceeds Bob's, he could not recover from Bob. Mary would be held responsible for 80 percent (100 percent, less Anthony's 20 percent).

Under contract law, the improper use of power or trust to deprive a person of free will and to substitute his or her objective with someone else's is called Select one: A. Innocent misrepresentation. B. Fraud. C. Undue influence. D. Duress.

C. Undue influence.

Bill tells his mother that when he dies she can reside in his house so long as she lives and then it will pass to his son, in return for Bill's mother's promise to buy Bill a new car. This arrangement creates a life estate agreement that is an interest in land that is Select one: A. Not valid unless Bill adds a codicil to his will. B. Valid only if all three parties to the life estate agree to the arrangement either orally or in writing. C. Unenforceable unless it is in writing. D. Valid only if his son signs a written release.

C. Unenforceable unless it is in writing. Oral contracts for life estates are unenforceable under the statute of frauds. Contracts related to the sale of real property or legal interests in real property must be in writing.

A contract has been formed for the construction of a shopping mall. The company representing the shopping mall has made a payment of $10,000. Which one of the following is the type of consideration is this payment? Select one: A. Binding promise B. Cash C. Valuable D. Contract

C. Valuable

Bilateral mistakes occur when both parties to a contract make the same mistake. Agreements under such conditions are generally Select one: A. Reformed. B. Cancellable. C. Voidable. D. Null.

C. Voidable.

Everlast Insurance decided to cancel its agency agreement with the Wellman Agency and notified the agency accordingly. The agent was allowed to keep signs and brochures identifying Everlast and to keep blank policies with Everlast's name on them. What type of authority does Wellman have to issue the policies left in its possession? Select one: A. Wellman has express authority left over from the original agency agreement. B. Everlast's failure to pick up the signs, brochures, and policies gave Wellman implied authority. C. Wellman has apparent authority if a third party has a reasonable belief that it still represents Everlast. D. Wellman's continued possession of the materials is a form of actual authority.

C. Wellman has apparent authority if a third party has a reasonable belief that it still represents Everlast.

If parties cannot agree on a labor contract after bargaining in good faith, they can each use economic pressure to strengthen their positions. Which one of the following statements is true regarding aspects of economic pressure? Select one: A. During bargaining negotiations, the employer may lock out employees to gain a more favorable bargaining position. B. The employees' right to any type of strike through the union is an absolute right of economic pressure. C. When the strike is over a labor contract, the employer can hire replacement employees and refuse to reinstate the striking employees. D. A sympathy strike is a strike by those who have multiple grievances and who join together to support another union in a labor dispute.

C. When the strike is over a labor contract, the employer can hire replacement employees and refuse to reinstate the striking employees.

In a written contract to purchase ten electric guitars from Phillip, Vivian agreed to pay $100 per guitar. The contract did not describe the guitars even though Phillip and Vivian had discussed the condition and quality of the guitars. When Phillip delivered the guitars, Vivian would not pay because they were not what she expected in terms of quality. In a legal action, it is likely Vivian Select one: A. Will not be allowed to submit evidence to clarify ambiguity since the parol evidence rule applies. B. Will be allowed to submit oral evidence in order to alter the terms of the contract. C. Will be allowed to submit oral evidence to help interpret or explain ambiguity in the contract. D. Will not be allowed to dispute the contract and must pay for the guitars.

C. Will be allowed to submit oral evidence to help interpret or explain ambiguity in the contract.

Tony got married at age 15, and then divorced only six months later. While still a minor, Tony was providing child support to his ex-wife. If Tony ceases to provide child support and his ex-wife sues him, it is likely that Tony Select one: A. Will not be required to pay child support until he reaches the age of majority. B. Will only be required to provide child support based on his age and his income. C. Will be required to continue to provide child support D. Will not be obligated to pay because he is still a minor.

C. Will be required to continue to provide child support

Hadley, Gary, and Ike have a joint tenancy on a $200,000 property. If Gary dies, Hadley and Ike Select one: A. Must sell the property and divide the proceeds equally. B. Will not receive any portion of Gary's share of the property since it will pass to his estate. C. Will receive and equally share Gary's portion of the property. D. Will share Gary's portion based on their original capital contributions when the property was first purchased.

C. Will receive and equally share Gary's portion of the property.

Which one of the following is true regarding the capacity of a minor to contract? Select one: A. A minor cannot avoid a contract when he or she misrepresents his or her age. B. A parent is always liable for a minor child's contract. C. A minor can challenge a contract and retain the benefits of the contract. D. A minor must fulfill his or her obligation under a contract for necessaries.

D. A minor must fulfill his or her obligation under a contract for necessaries.

Which one of the following statements is true regarding the validity of a contract with a minor? Select one: A. A minor's contract for a bail bond is void. B. A minor's marriage contract is void. C. A minor's contract for performance of services is generally enforceable. D. A minor's contract to purchase necessaries is generally enforceable.

D. A minor's contract to purchase necessaries is generally enforceable.

Which one of the following is a defense against conversion? Select one: A. Plaintiff demanded return of the property B. Defendant had the property in its possession the entire time C. Defendant acted in good faith D. A plaintiff's failure to establish the right of possession of the property

D. A plaintiff's failure to establish the right of possession of the property

If an insurer ratifies an agent's unauthorized actions with full knowledge of the facts, then the insurer Select one: A. Creates a binding third party relationship with any injured party. B. Waives its rights to deny policy benefits. C. Effectively licenses the unauthorized agent to act on its behalf. D. Accepts the benefits of those actions.

D. Accepts the benefits of those actions.

Martin visited his insurance agent Laura to discuss his insurance needs. Laura recommended that Martin purchase a businessowners policy and Martin agreed with Laura's recommendation. Laura helped Martin complete an insurance application and she sent the completed and signed application to Blythe Insurance Co., along with Martin's premium payment check. Blithe cashed Martin's check, issued the policy, and mailed the policy to Martin. Blythe's actions were Select one: A. A solicitation of an offer. B. An offer. C. A counteroffer. D. An acceptance.

D. An acceptance.

Tania was employed as a manager at a 24-hour fast food restaurant. She split each week with two other managers and worked an average of 56 hours a week. Tania was paid a flat rate each week. Under the wage and overtime provisions of the Fair Labor Standards Act, Tania is most likely categorized as Select one: A. A key employee. B. A nonexempt employee. C. A qualified employee. D. An exempt employee.

D. An exempt employee.

Contracts subject to the statute of frauds include Select one: A. Contracts for the sale of land and contracts for the sale of goods between merchants. B. Oral promises to pay debts against a decedent's estate and contracts for the sale of land. C. Contracts that can be performed within one year and contracts to pay one's own debt. D. Contracts for the sale of an interest in land and contracts for the sale of personal property for at least $500.

D. Contracts for the sale of an interest in land and contracts for the sale of personal property for at least $500.

Gibson Tours offers sightseeing tours of a major U.S. city in five languages. The organization recently became aware that it could be subject to large fines if it failed to protect the data of European Union (EU) residents according to the General Data Protection Regulation (GDPR). A consultant advised Gibson Tours management that it must comply with GDPR because it frequently processes data of EU residents. Which one of the following is a requirement for Gibson Tours under the GDPR? Select one: A. Personal data may only be erased when requested by the individual. B. Personal data must not be tracked as it moves across the organization. C. Data can't be kept for any longer than a year. D. Data breaches must be reported to authorities and individuals within 72 hours.

D. Data breaches must be reported to authorities and individuals within 72 hours.

Which one of the following is an insurer's post-loss alternative when coverage is questionable? Select one: A. Deny the claim B. Pay the loss and defense costs C. Refuse to pay D. Defend under an effective reservation of rights notice or nonwaiver agreement

D. Defend under an effective reservation of rights notice or nonwaiver agreement

Fred works for a company subject to Title VII of the Civil Rights Act of 1964 and is convinced that his employer has intentionally and repeatedly overlooked him for a promotion because of his race. Which one of the following legal theories applies to this case? Select one: A. Quid pro quo B. Hostile work environment C. Disparate impact D. Disparate treatment

D. Disparate treatment

As a general rule of contract law, the assignee's rights Select one: A. Cannot be delegated to the assignee by the assignor. B. May not be restricted by contract or policy provisions. C. Are non-negotiable. D. Do not exceed the assignor's rights.

D. Do not exceed the assignor's rights.

Dick purchased a farm home from his neighbor Bob who orally agreed to sell Dick the entire property including the old barn for $200,000. Before any contracts were drawn up and before any money was exchanged, Dick, in reliance on Bob's oral contract to sell, sided the barn and made substantial improvements. Bob liked the improvements so much he said he would pay Dick for his expenses but he no longer wanted to sell the property. Under these conditions, many courts would Select one: A. Declare the oral contract void and would not require Bob to reimburse Dick for the improvements since he had no right to make the improvements. B. Consider the case "inside the statute of frauds" and would hear evidence from both Dick and Bob prior to making a decision. C. Declare the oral contract void and require Bob to reimburse Dick for the improvements. D. Enforce the oral contract in the interest of fairness.

D. Enforce the oral contract in the interest of fairness. Most courts would enforce the oral contract in the interest of fairness. Courts would generally consider this oral contract outside the statute of frauds and would not hear evidence relating to the case. The contract is valid and enforceable.

Beatrice's Beauty Shop had Francesca come by three times a week to do pedicures. Beatrice and Francesca had separate businesses; however, customers think Francesca works for Beatrice. Francesca's cuts a customer's toe severely. The customer believes that she may hold Beatrice liable. This situation represents agency by Select one: A. Appointment. B. Acts. C. Ratification. D. Estoppel.

D. Estoppel.

Mark works at a company with 75 other electricians. They recently voted to unionize. More than 60 percent of the employees voted for the union. When the employer refuses to recognize the vote, what is the union's next step? Select one: A. File a claim for breach of contractual obligation B. Present a grievance under Title VII of the Civil Rights Act of 1964 C. Begin the collective-bargaining process D. File a petition with the National Labor Relations Board (NLRB)

D. File a petition with the National Labor Relations Board (NLRB)

Which one of the following best describes the aspects of the employer-employee relationship in which age discrimination is barred by the Age Discrimination in Employment Act? Select one: A. All aspects of the employer-employee relationship that are not covered by state law B. Any aspect of the employer-employee relationship directly related to wages C. Only the process by which employees are hired and terminated D. Hiring, promotion, payment, dismissal, and the terms, conditions, and privileges of employment

D. Hiring, promotion, payment, dismissal, and the terms, conditions, and privileges of employment

Franklin says to Dorian: "I will sell you 15 dog collars in any color at $10.00 each if you give me the money by Saturday." Which one of the following statements constitutes an unconditional and unequivocal acceptance by Dorian? Select one: A. I will buy the collars on Sunday when I come over to your house. B. I hope to have the money this weekend to buy the dog collars you are selling if I am able to get to the bank. C. I accept. I will buy 15 dog collars at $8.00 each on Saturday. D. I accept. I will buy the collars on or before Saturday with the color of the collars to be worked out.

D. I accept. I will buy the collars on or before Saturday with the color of the collars to be worked out.

The Delmond Corporation is a diversified financial services company that does not sell insurance. Delmond wanted to acquire the Cintriell Insurance Company, a stock insurer. Under most states' insurance company merger laws, Delmond may acquire Cintriell Select one: A. If Delmond first becomes an insurance company. B. Only if Delmond merges into Cintriell and Delmond no longer exists as a corporation. C. With Cintriell's consent, whether the Department of Insurance approves or not. D. If it complies with the insurance company merger laws including Department of Insurance approval.

D. If it complies with the insurance company merger laws including Department of Insurance approval.

Samuel, a truck driver for Fredico's Frozen Vegetables, discovered that the refrigeration unit had failed on his company truck on a recent cross-country assignment. Samuel was concerned about the vegetables thawing before he reached his first store. Samuel was unable to get in touch with his supervisor concerning the refrigeration unit's failure and rented a functional refrigeration truck to proceed to his destination. This was an example of which one of the following types of authority? Select one: A. Apparent B. Employee C. Express D. Implied

D. Implied Implied authority is the actual authority implicitly conferred on an agent by custom, usage, or the principal's conduct indicating the intention to confer such authority. Implied authority can also apply when an agent acts beyond the usual scope of authority in an emergency

Roscoe, a waiter at Pravalt's Restaurant, noticed the kitchen had run out of lemons. Mr. Pravalt, the owner, is out of town. Rather than displease his customers, Roscoe went next door to the grocery and purchased lemons. This was an example of which type of authority? Select one: A. Direct authority B. Apparent authority C. Express authority D. Implied authority

D. Implied authority

Which one of the following is the primary advantage of incorporation? Select one: A. It protects businesses from financial loss B. It allows businesses to grow C. It exempts the corporation from any income tax liability D. It limits owners' liability for the corporations' contracts and torts

D. It limits owners' liability for the corporations' contracts and torts

Sam employed 14 full-time employees, 30 part-time employees, three consultants, five temporary workers, eight unpaid interns, and had 10 people on leave. Jack, one of Sam's employees, wanted to take medical leave. Jack was not sick, but Jack's father was, and Jack intended to take care of him. Jack had worked for Sam for three months, took a two-year break to study abroad, and then worked full-time for another eight months before requesting this time off. Jack had worked 1,500 hours during that eight-month period. Jack is not covered by the Family Medical Leave Act because Select one: A. Jack has not worked for 1,750 hours during the 12-month period preceding the medical leave. B. Jack can only take medical leave for his own health, that of his spouse, or that of his child. C. Sam does not employ 50 applicable employees. D. Jack has not worked for Sam for 12 months.

D. Jack has not worked for Sam for 12 months.

Jack is a producer for Westfork Mutual. One of his customers who is insured for homeowners and personal auto coverage called to advise Jack that his 17-year-old son Harry had just gotten his driver's license. Since they were not adding an additional car to the policy, Jack advised the customer that Harry would be covered but they would not add his name until the auto policy renewed in 6 months. He warns his customer that the premium will probably increase significantly when they add Harry's name at renewal. Two weeks later, Harry is in an accident causing significant damage to his dad's car. Westfork Mutual pays the claim, but accuses Jack of a breach of his duty to disclose risks. Which one of the following statements is correct regarding Jack's liability to Westfork Mutual? Select one: A. Jack is not liable to Westfork Mutual because Harry did not get his license until after the coverage was bound. B. Jack is liable to Westfork Mutual for the full amount of the claim because he failed to disclose material information. C. Jack is not liable to Westfork Mutual because Harry getting his license is not considered material information. D. Jack is liable to Westfork Mutual for the difference in premium because if the insurer had known about Harry it would have added him at a higher premium.

D. Jack is liable to Westfork Mutual for the difference in premium because if the insurer had known about Harry it would have added him at a higher premium. The addition of a new young driver is material to the underwriting decision, and would affect the premium.

June's employer has a gift program in December of each year that allows employees to select one gift from a catalog of items. These employees are taxed according to the retail value of the item selected and may opt to take cash or even reject the gift option. In this situation the most significant element of the employee's gift is Select one: A. The employer's donative intent. B. The employer's delivery of the gift to the employee. C. The objective manifestation of the gift process. D. June's acceptance of the gift.

D. June's acceptance of the gift.

What distinguishes toxic torts from other types of torts? Select one: A. The normal remedies under common law are unavailable for damages suffered by private plaintiffs. B. Commercial general liability policies generally have specific exclusions that address liability for toxic torts. C. Toxic torts pertain to the activities of owners, generators, and transporters of hazardous waste. D. Liability for toxic torts is generally established by statute rather than by common law.

D. Liability for toxic torts is generally established by statute rather than by common law.

To save money, Josiah's Construction Company selected Barr Plumbing for its next construction job. Barr recently had its business license revoked for shoddy work. It used Barr for all its plumbing jobs on residential homes, even though it knew about Barr's problems with work quality. At the Mehmet's new house, Barr used inferior pipes in the construction, which caused a massive leak after Mehmet moved in. Josiah's Construction Company is Select one: A. Not liable since Barr Plumbing is an independent contractor. B. Not liable since Josiah's Construction Company did not direct the work. C. Liable since Barr's workers would qualify as employees. D. Liable because Josiah was negligent in selecting a contractor.

D. Liable because Josiah was negligent in selecting a contractor.

Mikael, a new insurance agent, sent a letter to all residents of his apartment complex that set out the basic terms of a renter's policy and stated: "I will issue this policy to you and expect your $300 annual premium if I don't hear from you to the contrary within 30 days." Linnea, a neighbor, received this letter but did not respond. Which one of the following statements about Linnea's legal obligation under contract law is true? Select one: A. Linnea has no legal obligation to pay Mikael $300 because silence can never constitute acceptance. B. Linnea is legally obligated to pay Mikael $300 unless she objects within 30 days. C. Linnea is legally obligated to pay Mikael $300. D. Linnea has no legal obligation to pay Mikael $300 because no prior course of dealing supports this.

D. Linnea has no legal obligation to pay Mikael $300 because no prior course of dealing supports this. Silence generally does not constitute acceptance. But if the parties have a prior course of dealing indicating that silence will be treated by them as acceptance, those prior dealings would set a precedent for acceptance.

An involuntary association is usually established by statute or regulation (such as assigned risk plans). Statutes creating such associations frequently specify the means of formation, financing, and Select one: A. Rights of members. B. By-laws. C. Type of association. D. Management.

D. Management.

Millwright Kitchen Tools supplies stainless steel can openers; however, it uses other manufacturing companies to make its products. Distribution is through Millwright. Chloe used one of Millwright's can openers that malfunctioned and injured her index finger severely. It is not known which manufacturer for Millwright produced the defective can opener. Which one of the following types of expanded liability could be applied to Chloe's accident? Select one: A. Concert of action B. Joint-action liability C. Multiple-action liability D. Market-share liability

D. Market-share liability Market-share liability applies when a product that has harmed a consumer cannot be traced to a single manufacturer. They are liable unless they can prove they could not have made the product involved.

Under the Jury Systems Improvement Act, an employer Select one: A. Must provide full pay to an employee that misses work due to jury duty. B. Must allow employees to use vacation time up to three weeks for jury duty. C. May not withhold payroll taxes on payment for an employee's jury duty time. D. May not discharge an employee for missing work due to jury duty.

D. May not discharge an employee for missing work due to jury duty.

Mehmet met with insurance agent Leila to obtain homeowners insurance. Leila had binding authority through Cintriel Insurance and she issued a written binder to Mehmet, submitting a signed homeowners insurance application to Cintriel at the same time. The binder stated that it provided homeowners coverage for 30 days, pending issuance of the policy. Five days later, before Cintriel acted on Mehmet's application, Mehmet's house was damaged by fire. Which one of the following statements about Mehmet's insurance is true? Select one: A. Mehmet has no homeowners insurance. B. Mehmet has homeowners insurance only if Cintriel ultimately issues a homeowners policy. C. Mehmet has no homeowners insurance but has an errors and omissions claim against Leila. D. Mehmet has homeowners insurance, as provided by the binder.

D. Mehmet has homeowners insurance, as provided by the binder. The binder is a temporary insurance contract that provides coverage as per its terms. The binder was effective here, whether a policy is issued or not.

Mustafa met with his insurance agent Lucy to obtain a businessowners 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, Select one: A. Mustafa will win, because Delmond's silence constituted acceptance of his application. B. Mustafa will lose, because silence cannot result in acceptance of an insurance application. C. Mustafa will lose, because Delmond never issued a policy. D. Mustafa will win, if Delmond's s delay on his application was unreasonable.

D. Mustafa will win, if Delmond's s delay on his application was unreasonable. Silence does not constitute acceptance in these situations. Insurers can, however, become liable under contract if they delay action on an application beyond a reasonable time.

Every partner has a fiduciary relationship with the other partners and the firm. Which one of the following fiduciary duties is implied in law and cannot be waived by contract? Select one: A. Honesty B. Ethical behavior C. Truthfulness D. Mutual trust

D. Mutual trust A fiduciary's duties of mutual trust, loyalty, and good faith are implied by law. They cannot be waived by contract.

ABC Corporation, which purchased insurance from XYZ Insurance Company, materially breached the insurance contract. Which one of the following is a right the insurer has against the insured? Select one: A. Substantial performance B. Tender of performance C. Repudiation D. Nonperformance

D. Nonperformance Nonperformance is a right the insurer has against the insured when a material breach occurs. A party's material breach excuses the other party's performance and immediately gives rise to remedies for breach of contract.

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? Select one: A. Liable at common law, not liable under today's law B. Liable at common law, liable under today's law C. Not liable at common law, not liable under today's law D. Not liable at common law, liable under today's law

D. Not liable at common law, liable under today's law

The Millwright Corporation and the Pravalt Corporation agreed that Millwright will merge with Pravalt. Each corporation's Board of Directors has adopted a plan of merger stating that Pravalt will merge into Millwright and Pravalt will no longer exist as a corporation. The plan of merger must be approved by the stockholders of Select one: A. Millwright but not Pravalt. B. Pravalt but not Millwright. C. Both Pravalt and Millwright, in all cases. D. Pravalt and Millwright, but Millwright only if voting or participating shares increases substantially.

D. Pravalt and Millwright, but Millwright only if voting or participating shares increases substantially.

The third-party's right to sue an undisclosed principal on a contract is subject to which one of the following exceptions? Select one: A. Principal's election to hold the agent liable B. Principal's settlement with the third party C. Third party's election to hold the principal liable D. Principal's settlement with the agent

D. Principal's settlement with the agent The right to sue an undisclosed principal on a contract is subject to the principal's settlement with the agent. A third party cannot sue the principal for nonpayment under a contract if the principal has a good-faith settlement of the account with the agent. For ex., when an undisclosed principal has supplied an agent with money to purchase goods, but the agent purchases the goods on credit and keeps the money, a settlement has occurred. The principal is not liable to then make a second payment to the third-party creditor. The settlement can occur before or after formation of the contract with the third party, but it must occur before disclosure of the principal to the third party.

Jan's National Guard unit was activated causing Jan to leave her job. Jan wants to return to this job when she comes home. What can Jan expect from her employer when she returns? Select one: A. Reemployment in any position available B. Reemployment when her original job is available C. To be rehired upon any opening occurring D. Prompt reemployment by her employer

D. Prompt reemployment by her employer The Uniform Services Employment and Reemployment Rights Act of 1994 (USERRA) ensures that those who serve or have served in the Armed Forces, Reserves, National Guard, or other military services are not disadvantaged as they reenter the civilian workforce and are not further discriminated against in future employment opportunities because of their military service.

Which one of the following is a source for bad faith cause of action? Select one: A. Cancellation for nonpayment of premium B. Unfair decrease in premium C. Failure to file counter claim on behalf of the insured D. Retaliatory cancellations

D. Retaliatory cancellations

The law recognizes incorporeal interests which are nonmaterial interests in real property. Which one of the following is an incorporeal interest? Select one: A. Zoning B. Nonconforming use C. Government controls D. Seller's restrictions on land use

D. Seller's restrictions on land use

An insured is accusing Millstone Insurance of unethical claims handling practices. The Department of insurance (DOI) has issued a subpoena requiring Millstone Insurance to produce its records for this claim and documents on its claim handling procedures. Which one of the following types of subpoena is being used by the DOI? Select one: A. Subpoena ad testificandum B. Final order subpoena C. Self-incrimination subpoena D. Subpoena duces tecum

D. Subpoena duces tecum

Teeter Insurance Company's authorized agent, Yu, bound coverage on a homeowner policy and stole the premium. Which one of the following statements describes the result of Yu's acts? Select one: A. Yu's E & O policy provided coverage for this intentional tort. B. Yu was solely liable since it was a criminal act to steal the premium. C. Teeter Insurance Company, his employer, was not responsible for Yu's criminal acts. D. Teeter Insurance Company was vicariously liable for Yu's negligence and intentional tort.

D. Teeter Insurance Company was vicariously liable for Yu's negligence and intentional tort.

Consideration is essential to a sales contract. All of the following would qualify as consideration, EXCEPT: Select one: A. The price that a party will pay B. The product that a party will sell C. The service that a party will perform D. The date the product will be delivered to a party

D. The date the product will be delivered to a party

Which one of the following is a defense to fraud? Select one: A. The plaintiff had knowledge of the detriment B. The statement was false C. The plaintiff did rely on the statement D. The defendant did not intend to deceive

D. The defendant did not intend to deceive

Which one of the following provides a stockholder with grounds to file a lawsuit to dissolve a corporation? Select one: A. The stockholder disagrees with an action of the corporation's Board of Directors. B. The directors or officers have declined to enter into a merger that may benefit the corporation. C. The stockholder disagrees with a decision to merge with another corporation. D. The directors' or officers' acts are illegal, oppressive, or fraudulent.

D. The directors' or officers' acts are illegal, oppressive, or fraudulent.

All of the following statements concerning a producer's appointment of subagents are true, EXCEPT: Select one: A. A subagent can discharge even discretionary duties when those acts are ratified by the insurance producer. B. Appointing subagents is authorized when discharging the producer's duties to the insurance principal would not otherwise be possible. C. Producers can appoint subagents to discharge their clerical duties. D. The doctrine of apparent authority cannot apply to subagents.

D. The doctrine of apparent authority cannot apply to subagents.

An employee of the Ralson Hotel used a pass key to enter a guest's room and physically attack her. What is an element that must be present in order for Ralson to be vicariously liable? Select one: A. Ralson must have had knowledge of the employee's prior bad acts, if any. B. Ralson must have demonstrated negligence in failure to secure the pass key. C. Ralson must have demonstrated negligence in supervising the employee. D. The employee must have committed the wrongful act within the scope of his employment.

D. The employee must have committed the wrongful act within the scope of his employment.

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 recordkeeping requirement B. The specific safety standard for boilers C. The reporting requirement D. The general duty clause

D. The general duty clause

Which one of the following statements describes a waiver? Select one: A. A breach of a policy condition B. A prohibition of asserting a claim or right that is inconsistent with a party's statement or conduct C. A voluntary act of choosing between two alternative rights or privileges D. The intentional relinquishment of a known right

D. The intentional relinquishment of a known right

Which one of the following is the most important factor indicating whether a communication is an offer? Select one: A. The offeror's subjective intent B. The offeree's objective reaction to the offer C. The offeree's subjective intent D. The language that the offeror uses in the offer

D. The language that the offeror uses in the offer

Which one of the following is true regarding the relationship between an insurer and a producer? Select one: A. Even before an agency relationship between an insurer and a producer is established, the producer can act on the insurer's behalf. B. Based on apparent authority, the producer is solely liable for any unauthorized acts made on behalf of the insurer. C. The producer's actions are authorized based on the terms of the producer's license to transact business in the state. D. The producer's actions must be consistent with the authority granted within the agency relationship.

D. The producer's actions must be consistent with the authority granted within the agency relationship.

Which one of the following is a defense of the right to privacy? Select one: A. Matters were disclosed in private B. Plaintiff has never published the information C. Plaintiff did not consent to publication D. The publication would not offend an individual of ordinary sensibility

D. The publication would not offend an individual of ordinary sensibility

Which one of the following statements is true regarding hazardous activities? Select one: A. The occupiers of adjacent property are required to refrain from using their property as they please because of an ultrahazardous activity nearby. B. A passerby who is injured forfeits a right to recover damages caused by a blast because the injured person knew explosives were stored on the property. C. States no longer consider aviation as an ultrahazardous activity since it has become so commonplace as to present no unusual danger. D. The storage and transportation of explosive substances is an ultrahazardous activity.

D. The storage and transportation of explosive substances is an ultrahazardous activity.

Persons claiming insanity may avoid a contract when Select one: A. They were experiencing a delusion. B. The contract is for necessaries. C. The contract was formed during an interval of time in which two or more independent third parties are willing to attest to the person's inability to contract. D. They did not know that a contract was forming or they did not understand the legal consequences of acts purporting to form the contract.

D. They did not know that a contract was forming or they did not understand the legal consequences of acts purporting to form the contract.

Which one of the following statements correctly describes how courts treat insurance policy provisions that require all waivers to be in writing? Select one: A. They generally enforce them. B. They generally require them. C. They always enforce them. D. They generally do not enforce them.

D. They generally do not enforce them.

A nurse told her mentally infirm patient, "Put me in your will and you can have your choice of meals every day. You know no one in your family loves you like I do!" The patient complied. Under which one of the following theories could this contract be avoided? Select one: A. Duress B. Mistake in fact C. Innocent misrepresentation D. Undue influence

D. Undue influence This contract be avoided under undue influence, which is the improper use of power or trust to deprive a person of free will and substitute another's objective, resulting in lack of genuine assent to a contract.

Which one of the following is a circumstance that is likely to make an exculpatory clause in a contract unenforceable? Select one: A. When it is part of a requirements contract B. When one party is a charitable organization C. When it is associated with an existing obligation D. When the complaining party has a bargaining disadvantage

D. When the complaining party has a bargaining disadvantage

Aaron had recently purchased a home. He called an insurance agent to secure a policy. Aaron told the agent that he needed immediate homeowners coverage for $345,000. The agent told Aaron that his home was covered. Under these circumstances, is Aaron covered? Select one: A. No, Aaron is not covered until the policy has been produced. B. Yes, there is coverage because the verbal agreement is an anticipatory agreement. C. No, the agent has only made an offer to insure. D. Yes, there is coverage because the agent's oral agreement is binding.

D. Yes, there is coverage because the agent's oral agreement is binding.

A badly leaking bathtub in the apartment above Preethi's has not been repaired by the landlord despite several requests. To waive payment of rent, Preethi as tenant can do which one of the following? Select one: A. She can remain despite the landlord's failure to repair. B. She can vacate the premises if repairs are not made. C. She can elect to use the security deposit to pay the rent. D. She can occupy the premises after expiration of the contract.

She can vacate the premises if repairs are not made.