MEGA CPCU 530

Disparate treatment theory

A legal basis for an employment discrimination complaint requiring the plaintiff to establish the employer's practice of intentionally treating individuals differently solely because of their sex, race, color, religion or national origin.

Wrongful death action

A legal cause of action that exists for the survivor of the deceased

Res ipsa loquitur

A legal doctrine that provides that, in some circumstances, negligence is inferred simply by an accident occurring.

Employment at will

A legal doctrine under which an employer may terminate any employee at any time for any reason or for no reason.

Warehouse receipt

A legal document that provides title to the goods in storage and assures delivery to the holder of the receipt.

Promissory estoppel

A legal principle that permits enforcement of a promise made without consideration in order to prevent injustice.

What is promissory estoppel?

A legal principle that permits enforcement of a promise made without consideration in order to prevent injustice.

Condemnation proceeding

A legal procedure by which a government body seeks a court's permission to seize private property by eminent domain

Foreclosure

A legal proceeding to terminate a mortgagor's interest in property; the mortgagee's remedy when the mortgagor defaults on payments.

What is bankruptcy?

A legal process where a person or business is unable to repay their debts.

Vicarious Liability

A legal responsibility that occurs when one party is held liable for the actions of a subordinate or associate because of the relationship between the two parties.

Agency

A legal, consensual relationship that exists when one party, the agent, acts on behalf of another party, the principal.

Release

A legally binding contract between the parties to a dispute that embodies their agreement obligates each to fulfill the agreement and releases both parties from further obligation to one another that relates to the dispute.

Contract

A legally enforceable agreement between two or more parties

Mortgagee

A lender in a mortgage arrangement, such as a bank or another financing institution.

Family purpose doctrine

A liability concept that holds the owner of an automobile kept for the family's use vicariously liable for damages incurred by a family member while using the automobile

Mechanic's Lien

A lien, granted by law to anyone who repairs a specific piece of property, that secures payment for the repairs.

Proprietary function

A local government's act that is not considered part of the business of government and that could be performed by a private enterprise.

Products Liability

A manufacturer's or seller's liability for harm suffered by a buyer, user, or bystander as a result of a product that has a dangerous manufacturing defect or design defect or that is not accompanied by a warning of an inherent hidden danger.

What is a pretrial conference?

A meeting between the parties and the judge to encourage settlements and discuss the case.

Outside director

A member of a corporation's board of directors who is a corporate officer and who may not necessarily be connected with the corporation.

What is a bilateral mistake?

A mistaken perception by both parties to a contract.

What is a unilateral mistake?

A mistaken perception by one party to a contract.

What is the Uniform Commercial Code (UCC)?

A model code adopted by states to provide consistent legal basis for business transactions.

General damages

A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.

incorporeal Interest

A nonmaterial interest in real property

Easement

A nonpossessory right to use another Peron's real property for a particular purpose

Negligent supervision

A parent's failure to exercise reasonable control and supervision over his or her child to prevent harm to others.

Limited liability partnership

A partnership limiting each partner's personal liability for acts or omissions of other partners.

What is a limited liability partnership (LLP)?

A partnership limiting each partner's personal liability for acts or omissions of other partners.

Competent Party

A party to a contract who has the basic or minimal ability to do something and the mental ability to understand problems and make decisions.

Who is a competent party?

A party to a contract who has the basic or minimal ability to do something and the mental ability to understand problems and make decisions.

Repudiation

A party's refusal to meet obligations under a contract

What is standing to sue?

A party's right to sue as one who has suffered a legal wrong.

Standing to sue

A party's right to sue, as one who has suffered or will suffer a legal wrong or an adverse effect from an action.

Anticipatory breach

A party's unequivocal indication before contract performance is due that he or she will not perform when performance is due

Extracontractual damages

A payment awarded by a court that exceeds the usual contract damages for a breach of contract.

Consequential damages

A payment awarded by a court to indemnify an injured party for losses that result indirectly from a worn such as a breach of contract or a tort

Punitive damages

A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act t deter similar conduct; the award needs to bear any relation to a party's actual damages.

Compensatory damages

A payment awarded by a court to reimburse a victim for actual harm

Bilateral Mistake

A perception by both parties to a contract that does not agree with the facts.

Unilateral Mistake

A perception by one party to a contract that does not agree with the facts

Contestable period

A period during which an insurer can challenge the validity of a life insurance policy

What is a contestable period?

A period during which an insurer can challenge the validity of a life insurance policy.

employee

A person hired to preform services for another under the direction and control of the other party called the employer.

Independent contractor

A person hired to preform services without being subject to the hirer's direction and control regarding work details.

Public invitee

A person invited to enter onto premises as a member of the general public for a purpose for which the land is open to the public.

Special agent

A person or an entity that is employed to act for the principal in a specific transaction or only for a particular purpose or class of work.

Tortfeasor

A person or an organization that has committed a tort

Creditor

A person or entity to whom money is owed.

Debtor

A person or entity who owes money to a creditor.

Carrier

A person or organization in the business of transporting property of others.

What is a holder in due course?

A person possessing a negotiable instrument in good faith.

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

What is a void contract?

An agreement that, despite the parties' intentions, never reaches contract status and is therefore not legally enforceable or binding.

Mediation

An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement.

Arbitration

An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding.

Par Value

An arbitrary dollar value that an organization assigns to its shares.

National Association of Insurance Commissioners (NAIC)

An association of insurance commissioners from the 50 U.S. states, the District of Columbia, and the five U.S. territories and possessions, whose purpose is to coordinate insurance regulation activates among the various state insurance departments.

.The creation of a security interest in property (collateral) is known as

An attachment

Legal Duty

An element of negligence that exists when parties are in such a relationship that the law imposes on one party the responsibility for the exercise of care toward the other party

Exempt employee

An employee who is paid a salary and who does not receive overtime pay.

Non-exempt employees

An employee who is paid by the hour and who receives hourly overtime pay

hostile work environment

An environment that exists when an employee is subjected to harassment that is so severe or pervasive that it alters the conditions of his or her employment and creates an abusive working environment

Condition subsequent

An event that if it occurs discharges a duty of performance in a contract.

Condition concurrent

An event that must occur at the same time as another condition in a contract

Condition Precedent

An event that must occur before a duty of performance arises in a contract

What is a condition subsequent?

An event that, if it occurs, discharges a duty of performance in a contract.

Hardship variance

An exception to the application of a zoning ordinance for lots that, because of size, topography, or other physical limitations, do not conform to the ordinance requirements for the zone.

Use variance

An exception to the application of a zoning ordinance to permit an otherwise prohibited use within the zone

Variance

An exception to the strict application of a zoning ordinance to permit a use that is not permitted otherwise.

Last Clear Chance Doctrine

An excuse for a plaintiff's contributory negligence that holds the party who has the last clear chance to avoid harm and fails to do solely responsible for the harm.

The type of contract that has not been completely performed by one or both of the parties is

An executory contract.

Enterprise Liability

An expanded liability concept requiring each member of an industry responsible for manufacturing a harmful or defective product to share liability, when a manufacturer at fault cannot be identified

Market Share Liability

An expanded liability concept that applies when a product that has harmed a consumer cannot be traced to a single manufacturer; all manufacturers responsible for a substantial share of the market are named in the lawsuit and are liable for their proportional share of the judgment

Concert of action

An expanded liability concept that applies when all defendants acted together or cooperatively

Conspiracy

An expanded liability concept that applies when two or more parties worked together to commit an unlawful act.

Alternative Liability

An expanded liability concept that shifts the burden of proof to each of several defendants in a tort case when there is uncertainty regarding which defendant's action was the proximate cause of the harm.

express warranty

An explicit statement about a product by the seller that the buyer or other user may rely on and that provides a remedy in the event the product does not perform as claimed.

What is an in pari delicto agreement?

An illegal transaction where both parties are equally at fault.

Implied Warranty of title

An implied promise in a contract for the sale of goods that the seller has legal ownership of goods and has no knowledge of nay security interest or other lien on the goods other than those disclosed at the buyer

Accession

An increase or addition to property

Broker

An independent producer who represents insurance customers.

What is a shareholder?

An individual or entity that owns shares or stock in a company.

Business invitee

An individual who has expressed or implied permission to be on the premises of another for the purpose of doing business.

A person who is absolutely required to pay the instrument according to its term has primary liability. Which one of the following statements is true?

A person who becomes liable on the instrument only if someone else refuses to pay or accept the instrument has secondary liability. Correct. A person who becomes liable on the instrument only if someone else refuses to pay or accept the instrument has secondary liability

Invitee

A person who enters a premise for the financial benefit of the owner or occupant

Licensee

A person who has permission to enter onto another's property for his or her own purposes.

Trespasser

A person who intentionally enters onto the property of another without permission or any legal right to do so

third party beneficiary

A person who is not a party to a contract but who benefits from it and has a legal right to enforce the contract if it is breached by either of the contracting parties.

Passive negligence

A plaintiff's failure to discover a product defect or to guard against a possible defect.

Which one of the following is a defense against conversion

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

Active negligence

A plaintiff's voluntary use of a defective product with knowledge of the potential danger resulting from the defect.

Valued policy

A policy 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.

What is a valued policy?

A policy 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.

quid pro quo sexual harassment

A practice whereby an employer demands or expects sexual favors in exchange for continued employment, workplace advancement or other job-related benefits.

Discovery

A pretrial exchange of all relevant information between the plaintiff and defendant.

collective bargaining

A process by which employees, represented collectively by a union, negotiate with the employer on a labor contract dealing with wages, hours, and working conditions.

Which one of the following statements is true regarding producer liability?

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

Offer

A promise that requires some action by the intended recipient to make an agreement

Offer

A promise that requires some action by the intended recipient to make an agreement.

What is a conditional promise?

A promise that requires some action by the intended recipient to make an agreement.

Subjacent Support

A property owner's right to have land supported by the earth below it.

Lateral Support

A property owner's right to have land supported by the land adjacent to it.

Counteroffer

A proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer.

Spot Zoning

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

What is the parol evidence rule?

A provision that prevents oral agreements from modifying written contracts.

Parole evidence rule

A provision that prevents the terms of a contract from being modified by evidence of oral or other agreements after the contract has been written

Tender offer

A purchase offer is made directly to the shareholders of the target, typically at an offer price greater than the current market price.

What is a tender offer?

A purchase offer made directly to the shareholders of the target, typically at an offer price greater than the current market price.

Relevance

A quality of evidence that is likely to prove or disprove an element of the case.

Condominium

A real estate development consisting of a group of units, in which the air space within the boundaries of each unit is owned by the unit owner, and all remaining real and personal property is owned jointly by all the unit owners.

Liquidated damages

A reasonable estimation of actual damages, agreed to by contracting parties and included in the contract, to be paid in the event of a breach or for negligence.

Profits a prendre

A right or privilege to enter another's land and take away something of value from its soil or from the products of its soil.

Tenancy

A right to possession or ownership, or both, of property.

Slight versus gross rule

A rule of comparative negligence that permits the plaintiff to recover only when the plaintiff's negligence is slight in comparison with the gross negligence of the other party.

Substantial factor rule

A rule used to determine the proximate cause of a loss by determining which of the act are significant factors in causing the harm.

Foreseeability rule

A rule used to determine the proximate cause when a plaintiff's harm is the natural and probable consequence of the defendant's wrongful act and when an ordinarily reasonable person would have foreseen the harm.

"but for" rule

A rule used to determine whether a defendant's act was the proximate cause of a plaintiff's harm based on the determination that the plaintiff's harm could not have occurred but for the defendant's act

Trust deed

A secured interest in real property that is held by a trustee to protect the lender until the loan is repaid by the borrower

perfected security interest

A security agreement that has been filed with the appropriate court to provide the surety a priority interest over others who may also have security interests in the property.

Pledge

A security device by which a borrower guarantees payment by delivering collateral to the lender to hold as security for the debt.

Non-waiver agreement

A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy.

What is a material fact?

A significant fact relevant to a decision or matter.

Personal injury spousal

A spouse can sue another person for injury to their spouse.

Reasonable person test

A standard for the degree of care exercised in a situation that is measured by what a reasonably cautious person would or would not do under similar circumstances.

representation

A statement of alleged fact

What is a representation?

A statement of alleged fact.

Good Samaritian Law

A statute providing that a person will not be liable for damages as a result of rendering aid to an injured person, without compensation, at the scene of an accident

Survival Statute

A statute that preserves the right of a person's estate to recover damages that person sustained between the time of injury and death

Statute of repose

A statute that requires a plaintiff to file a lawsuit within a specific time period after a wrongful act by a defendant, such as improper construction of a building, regardless of when the injury occurred or was discovered.

Statute of limitations

A statute that requires a plaintiff to file a lawsuit within a specific time period after the cause of action has accrued, which is often when the injury occurred or was discovered.

ad testificandum

A subpoena to compel a witness to testify

Duces tecum

A subpoena to compel production of documents or records.

Binder

A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued.

What is a binder?

A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued.

Holdover tenant

A tenant who has a lease for a number of years and at the expiration of the lease continues to occupy the premises

A government based on religious doctrine, where religious leaders may govern, is known as

A theocratic government. Correct. A government based on religious doctrine, where religious leaders may govern, is known as a theocratic government.

Creditor beneficiary

A third party beneficiary owed that is to be satisfied by performance of a contract

Apparent Authoirty

A third party's reasonable belief that an agent has authority to act on the principal's behalf.

What is apparent authority?

A third party's reasonable belief that an agent has authority to act on the principal's behalf.

Incidental beneficiary

A third-party beneficiary who has no contractual rights but benefits from a contract even though that is not the intent of the parties to the contract.

Donee beneficiary

A third-party beneficiary who receives the benefit of a contracts performance as a gift from the promise with the intent of the contracting parties

Malicious interference with prospective economic advantage

A tort involving intentional interference with another's business, or with another's expected economic advantage

Intentional tort

A tort is committed by a person who foresees that his or her act will harm another person.

Interpretative rule

A type of administrative agency rile that interprets statutes, providing guidance for agency staff or regulated parties, but that lacks the force and effect of law and therefore is not binding on individuals.

Procedural rule

A type of administrative agency rule that prescribes procedures for agency operations, legislative rulemaking, and adjudication proceedings

Receivership

A type of bankruptcy an insurer enters into when a receiver is appointed to manage the insurer and its property.

What is receivership?

A type of bankruptcy an insurer enters into when a receiver is appointed to manage the insurer and its property.

Legislative rule

A type of substantive administrative agency rule that comes from a statutory delegation of authority and that has the same force as a law enacted by congress or a legislature.

What is a jury verdict?

A verdict reached by a jury that makes findings of fact.

Unincorporated Association

A voluntary association of individuals acting together under a common name to accomplish a lawful purpose

What is an unincorporated association?

A voluntary association of individuals acting together under a common name to accomplish a lawful purpose.

Dissolution

A voluntary or an involuntary termination of a corporation

What do all pleadings (complaint, answer, reply) constitute?

A written dialogue between the parties that informs the court about the substance of the dispute.

power of attorney

A written document that authorizes one person to act as another person's agent or attorney-in-fact.

Deed

A written instrument that transfers interest in real property

Tort

A wrongful act or an omission, other than a crime or a breach of contract, that invades a legally protected right.

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.

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.

Right-to-work state

A U.S. state in which employees may work in unionized workplaces without joining or paying dues.

Which one of the following correctly describes a bailee's right to limit liability for the bailed goods in the bailment contract?

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

Possessory Lien

A bailee's right to retain possession of a bailor's property as security for the payment of a debt or performance of some other act.

Bad faith (outrage)

A breach of the duty of good faith and fair dealing.

Wrongful discharge

A cause of action an employee may have against an employer for illegal termination of employment

Proximate cause

A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened.

Allegation

A claim made in the complaint by the plaintiff, specifying what the plaintiff expects to prove to obtain a judgment against the defendant.

Personal defense

A claim to an instrument by any person and any defense that would be effective in a simple contract transaction.

Mass tort litigation

A class-action suit based on tort law rather than on contract law.

Civil Law

A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.

What is an incontestable clause?

A clause that states that the insurer cannot contest the policy after it has been in force for a specified period, such as two years, during the insured's lifetime.

Uniform commercial Code

A code of federal laws that govern commercial transactions in the United States.

Contributory negligence

A common law principle that prevents a person who has been harmed from recovering damages if that person's own negligence contributed in any way to the harm.

Comparative neglagence

A common law principle that requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees of fault.

The licensing of products between different countries can occur for which one of the following primary reasons?

A company may lack sufficient knowledge about another country's legal, political, social, and business environments.

Pure comparative negligence rule

A comparative negligence rule that permits a plaintiff to recover damages discounted by his or her own percentage of negligence, as long as the plaintiff is not 100% at fault.

49 percent comparative negligence rule

A comparative negligence rule that permits a plaintiff to recover reduced damages so long as the plaintiff's negligence is less than the other party's negligence.

50 percent comparative negligence rule

A comparative negligence rule that permits a plaintiff to recover reduced damages so long as the plaintiff's negligence is not greater than 50 percent of the total negligence leading to harm.

Tenancy in common

A concurrent ownership of property, in equal or unequal shares, by two or more joint tenants who lack survivorship rights.

Joint tenancy

A concurrently owned and undivided interest in an estate that transfers to a surviving joint tenant upon the death of the other.

third-party beneficiary contract

A contract between two parties that benefits a third party.

Bilateral contract

A contract in which each party promises a performance

Unilateral contract

A contract in which only one party makes a promise or undertakes the requested performance.

Contract of indemnity

A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss.

What is a contract of indemnity?

A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss.

Elements of a contract

A contract must have Agreement Capacity to contract Consideration Legal Purpose

Executed contract

A contract that has been completely performed by both parties.

Executory contract

A contract that has not preformed by one or both of the parties

Severable contract

A contract that includes two or more promises each of which a court can enforce separately.

Implied-in-fact contract

A contract that is not express but that the parties presumably intended, either by tacit understanding or by the assumption that it existed.

Implied contract

A contract that is not expressed but that the parties presumably intended, either by tacit understanding or by the assumption that it existed.

What is a voidable contract?

A contract that one of the parties can reject (avoid) based on some circumstance surrounding its execution.

voidable contract

A contract that one of the parties can reject (avoid) based on some circumstance surrounding its execution.

Conditional Contract

A contract that one or more parties must perform only under certain conditions

What is a conditional contract?

A contract that one or more parties must perform only under certain conditions.

Express contract

A contract whose terms and intentions are explicitly stated.

What is a severable contract?

A contract with enforceable promises that can be separated.

What is an exculpatory clause (exculpatory agreement)?

A contractual provision purporting to excuse a party from liability resulting from negligence or an otherwise wrongful act.

exculpatory clause

A contractual provision that relieves one (or both) of the parties to a contract from tort liability for ordinary negligence

Inside Director

A corporate officer that serves on the corporation's board of directors.

Treasury Stock

A corporate stock issued as fully paid to a stockholder and subsequently reacquired by the corporation to use for business purposes.

Injunction

A court-ordered equitable remedy requiring a party to act or refrain from acting.

Specific performance

A court-ordered equitable remedy requiring a party to perform a certain act often but not always as a result of a breach of a contract.

Lien

A creditor's legal right or interest in another's property, usually lasting until satisfaction of the specific debt or duty that the lien secures.

Libel

A defamatory statement expressed in writing

Slander

A defamatory statement expressed in writing.

Which one of the following statements is correct?

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.

Real defense

A defense of an obligor of an negotiable instrument that may be asserted even against a holder in due course

Charitable immunity

A defense that shields charitable organizations from liability

Immunity

A defense that, in certain instances, shields organizations or persons from liability.

Assuption of Risk

A defense to negligence that bars a plaintiffs recovery for harm caused by the defendants negligence if the plaintiff voluntarily incurred the risk of harm

Interspousal immunity

A defense to negligence that grants immunity to one spouse from the other spouse's lawsuits for torts committed before during andafter marriagee.

Parent-Child Immunity

A defense to negligence that grants immunity to parents from their children's lawsuits for torts.

Sovereign Immunity

A defense to negligence that protects the government against lawsuits for tort without its consent.

Assumption of Risk Defense

A deference to negligence bars a plaintiff's recovery for harm caused by the defendant's negligence if the plaintiff voluntarily incurs the risk of harm.

Receiver

A disinterested person business entity appointed to receive, protect and account for money or other property due.

What is a receiver?

A disinterested person or business entity appointed to receive, protect, and account for money or other property due.

What is res judicata?

A doctrine that bars parties from bringing a second lawsuit on the same claim.

Res Judicata

A doctrine that bars parties to a lawsuit on which final judgment has been rendered from bringing a second lawsuit on the same claim or on related transactions.

Attractive Nuisance Doctrine

A doctrine treating a child as a licensee, or guest, rather than a trespasser on land containing an artificial and harmful condition that is certain to attract children.

Bill of lading

A document acknowledging receipt of goods from the shipper, given by the carrier which includes the terms of the contract of carriage for the goods.

Negotiable instrument

A document guaranteeing the payment of a specific amount of money.

mitigation of damages

A duty owed by an injured party to a claim to take reasonable measures to minimize or avoid additional injury or loss.

Material Fact

A fact that is significant to a decision or matter at hand

What is a material fact?

A fact that is significant to a decision or matter at hand.

What are the 6 elements of Fraud?

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 (For a fraud case the first five are needed, For a damages suit all six must be proven.)

Misrepresentation

A false statement of a material fact on which a party relies.

What is misrepresentation?

A false statement of a material fact on which a party relies.

Defamation

A false written or oral statement that harms another's reputation.

What is a security agreement?

A filed agreement that provides priority interest.

What is a partnership?

A for-profit business entity jointly owned by two or more persons who share ownership and profits (or losses), although not necessarily on an equal basis.

Partnership

A for-profit business entity jointly owned by two or more persons who share ownership and profits (or losses,) although not necessarily on an equal basis.

Limited liability company (LLC)

A form of business entity that provides its owners the limited liability of a corporation and the tax advantages of a partnership.

What is a limited liability company (LLC)?

A form of business entity that provides its owners the limited liability of a corporation and the tax advantages of a partnership.

Special damages

A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages.

Limited partnership

A form of partnership made up of one or more general partners, who have unlimited liability, and one or more limited partners, whose liability is limited to the amount of capital they have contributed to the partnership.

What is a limited partnership?

A form of partnership made up of one or more general partners, who have unlimited liability, and one or more limited partners, whose liability is limited to the amount of capital they have contributed to the partnership.

Motion

A formal request for the court to take a particular action.

Pleading

A formal written statement of the facts and claims of each party to a lawsuit.

Fee simple estate

A full ownership interest in property with the unconditional right to dispose of it.

Closed Shop

A generally illegal agreement requiring workplaces to hire only a particular union's members

Hot Cargo agreement

A generally prohibited agreement in which an employer will not engage the products or services of another person currently disputed by the union.

Zoning

A government's regulation of building construct and occupancy and of land use according to a comprehensive plan

Injurious Falsehood

A group of torts involving disparagement that causes harm to any kind of legally protected intangible property right.

Tenancy by the entirely

A joint tenancy between husband and wife.

Special verdict

A kind of verdict reached by a jury that makes findings of fact by answering specific questions posed by the judge. The judge then applies the law to the facts as the jury has found them.

General verdict

A kind of verdict that entails a complete finding and a single conclusion by a jury on all issues presented

Special Exception

A land use explicitly permitted by a zoning ordinance but subject to certain limitations.

Nonconforming use

A land use that is impermissible under current zoning restrictions but that is allowed because the use was lawful before the restrictions took effect.

Estate for years

A landlord tenant estate created from a definite period

Tenancy at will

A landlord tenant estate in which the tenant has permission to occupy a premises as a landlord desires

Periodic tenancy

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

What is the statute of frauds?

A law requiring certain contracts to be in writing and signed.

Direct action Statute

A law that permits a negligence victim to sue an insurer directly or to sue both the insurer and wrongdoer jointly

Common name statute

A law that permits service of process on a partnership by serving any one of the partners.

What is a common name statute?

A law that permits service of process on a partnership by serving any one of the partners.

Statute of frauds

A law to prevent fraud and perjury by requiring that certain contract be in writing and contain the signature of the party responsible for preforming that contract

Derivative suite

A lawsuit brought by one or more shareholders in the name of the corporation.

Class action lawsuit

A lawsuit in which one person of a small group of people represent the interest of an entire class of people in litigation

Rescission

A legal act of canceling something (Like a contract) and making it void legal

Disparate impact theory

A legal basis for an employment discrimination complaint requiring the plaintiff to establish that an apparently neutral employment practice or criterion, applied equally to all individuals, operated to exclude a disproportionate number of the protected class.

b

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 Choose one answer. A. Prior to the loss. B. At the time ofloss. C. When the property is acquired. D. When the loss is reported.

Intentional nuisance

Purposeful interference with another party's enjoyment of his or her property.

Intentional nuisance

Purposeful interference with property enjoyment.

Repudiation

Refusal to meet obligations under a contract.

Dishonor

Refusal to pay or accept a negotiable instrument.

Discharge

Release from legal obligations, such as debt repayment.

Evidence must be

Relevant, material, and competent

Product recall

Removal of a defective product from the market.

Like domestic courts, courts deciding international cases must determine whether they have jurisdiction over the person or entity and over the subject matter and whether they have jurisdiction to

Render the particular judgment in the case.

If fraud is proven what are the two remedies?

Rescission Sue for damages

Administrative agencies have two primary functions

Rulemaking - Promulgate rule to implement legislative policies Adjudication - Process to decide cases and settle disputes.

What do civil law systems rely on?

Scholarly interpretations of their codes and constitutions.

Uniform Commercial code article 9

Secured transaction regulates how security interest must be created, what they can entail , and how they can be enforced.

Equity courts

Seeks fair solutions beyond what traditional legal remedies can offer.

What are administrative agencies?

Separate source of law within the executive branch.

Hostile work environment

Severe or pervasive harassment altering work conditions.

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.

b

Shota submitted an auto insurance application to Cromley Insurance. The application asked if anyone lived with Shota and Shota answered "no." In fact, two other people lived with Shota, each with poor driving records. Cromley issued a policy to Shota, which it would not have done had it known about the other residents. Which one of the following statements about Shota' s application for auto insurance is true? Choose one answer. A. Shota' s had no duty to provide information about other residents of his household. B. Shota made a material misrepresentation, which would allow Cromley to avoid his policy. C. Shota's silence was not a representation so Cromley cannot avoid his policy. D. Shota's misrepresentation was not material so Cromley cannot avoid his policy.

Consideration

Something of value exchanged in a contract.

Consideration

Something of value or bargained for and exchanged by the parties to a contract.

What is consideration?

Something of value or bargained for and exchanged by the parties to a contract.

To take an administrative action to a curt for judicial review a plaintiff must have...

Standing to sue A final order exhaustion of administration remedies.

Right-to-work state

State where union membership is not mandatory.

Preferred stock

Stock that is generally nonvoting but that has priority over common stock, usually regarding dividends and capital distribution if the corporation ends its existence

Judicial review of agency decisions involves issues of

Stranding to sue Exhaustion of administrative remedies Standards of review agency abuse of discretion

Holder in due course

The person to whom a negotiable instrument has been issued or endorsed and who possesses it for value, in good faith and without notice that it may not be valid, can be claimed by another, is overdue, or was previously dishonored

What is a reply?

The pleading filed by the plaintiff after receiving the defendant's answer.

Who leads the executive branch at the federal level?

The president.

What is discovery?

The pretrial stage where parties exchange information and evidence.

Principle of indemnity

The principal that insurance policies should provide a benefit no greater than the loss suffered by an insured

Doctrine of stare decisis

The principal that lower courts must follow precedents set by higher courts.

What is the principle of indemnity?

The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured.

Perfection

The process of establishing a security interest as enforceable.

Liquidation

The process of selling assets to pay off debts.

What is an acquisition?

The purchase of one company by another, through buying its assets or shares.

Vendee

The purchaser or real property

Explain the purpose of pretrial discovery and some of the tools used during discovery.

The purpose of discovery is for lawyers on both sides to gather as much information as possible about all allegations and evidence the parties might present. This enables the parties to know as much as possible before trial and prevents surprises. If testimony at trial contradicts an earlier deposition or an answer to a written interrogatory, lawyers can use the pretrial evidence to challenge the evidence presented at trial. Discovery can sometimes lead to settlement; once the parties know all the evidence, they may decide to settle rather than go to trial.

Privity of contract

The relationship that exists between the promisor and the promisee of a contract.

False imprisonment

The restraint or confinement of a person without consent or legal authority.

Restitution

The return of specific property by court order

What is restitution?

The return of specific property by court order.

Patent

The right granted by a government entity to an inventor or applicant for a limited time period to exclusively own and control a new, useful and nonobvious invention.

Eminent domain

The right of a government to seize private property for public use

Ministerial duties

The routine or mechanical tasks preformed by agents.

The UCC applies to commercial transactions such as

The sale of goods leases contracts negotiable instruments It is not a federal law, It is a moral code.

These contracts must be in writing

The sale of real estate Agreements longer than one year transactions worth $500 or more agreements to pay a debt agreements where an executor promises to pay the debts of an estate from personal funds.

False arrest

The seizure or forcible restraint of a person without legal authority.

Vendor

The seller of real property

The central idea of the socialist-communist law system was the emphasis on

The state's interest over that of individuals.

Bailment

The temporary possession by one party (the bailee) of personal property owned by another party (the bailor) for a specific purpose, such as cleaning or repair.

Assault

The threat of force against another person that creates a well-founded fear of imminent harmful or offensive contact.

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

The tortfeasors' capacity.

Assignment

The transfer of rights or property.

Malicious abuse of process

The use of civil or criminal procedures for a purpose for which they were not designed.

A secured transaction

The use of collateral to secure the promise that a lender will pay back a loan

What is duress?

The use of force or threats to compel a party to act against their wishes.

What is duress?

The use of restraint, violence, threats of violence, or wrongful pressure to compel a party to act contrary to his or her wishes or interests.

Duress

The use of restraint, violence, treats of violence, or wrongful pressure to compel a party to act contrary to his or her wishes or interests.

Closed shop

Illegal agreement requiring specific union membership.

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?

Implied authority

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?

Implied warranty

Cooperative ownership

Ownership, usually of real property such as an apartment building, by a corporation, the stockholders of which receive long-term proprietary leases to a portion of the property and a proportional vote in its affairs based on the number of shares owned.

Define negligent supervision.

Parent's failure to control and supervise child, causing harm.

What is negligent supervision?

Parent's failure to control and supervise child, causing harm.

What parties lack the capacity to contract?

Parties that lack the capacity to contract include minors, insane people, intoxicated people (under the influence of alcohol or drugs), and artificial entities (such as insurers) that are restricted by law or corporate charter from entering into certain contracts. Let's discuss each of these parties.

Bailee

Party temporarily possessing personal property in a bailment.

Competent party

Party with basic ability and mental capacity to understand.

Overdue

Past the due date or payment deadline.

Safe harbor

Penalty relief for good-faith compliance efforts.

Substantial performance

Performance of necessary terms of an agreement.

Contributory negligence

Plaintiff's own negligence contributes to the harm.

Active negligence

Plaintiff's voluntary use of a known defective product.

What are the four forms of secured transactions?

Pledge Chattel mortgage Conditional sale

What are the checks of the executive branch?

Power to appoint judges and veto laws.

Common law system

Precedent rulings from prior cases that related to the facts of current cases

Privacy act

Prevents the government from disclosing certain information and records without the individual's written permission.

The right to sue an undisclosed principal on a contract is subject to which one of the following exceptions?

Principal's settlement with the agent

Alternative Dispute Resolution (ADR)

Procedures to help settle disputes without litigation, including arbitration, mediation, and negotiation.

What is alternative dispute resolution (ADR)?

Procedures to settle disputes without litigation.

Hot cargo agreement

Prohibited agreement not using disputed union services.

Community Property

Property owned or acquired by both spouses during a marriage by their communal efforts. Each spouse has an undivided one-half interest in the community property.

Collateral

Property pledged as security for a loan.

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 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.

What is a merger?

The combination of two or more companies into a single entity.

What is exhaustion of administrative remedies?

The completion of all possible administrative procedures and appeals in a case.

Assignor

The party to a contract who makes an assignment

Offeror

The party to a contract who promises to give something in return for a promise or an act by another party.

Who is the plaintiff?

The party who files the complaint in a lawsuit.

consignor

The party who is shipping goods.

Substantial Performance

The performance of the primary, necessary terms of an agreement.

What is substantial performance?

The performance of the primary, necessary terms of an agreement.

Common carriers

Airlines, railroads, or trucking companies that furnish transportation to any member of the public seeking their offered services.

Implied License

The permission to enter onto another's land arising out of a relationship between the party who enters the land and the owner.

License

The permission to use real property for a particular purpose

Plaintiff

The person or entity who files a lawsuit and is named as a party

Mortgagor

The person or organization that borrows money from a mortgagee to finance the purchase of real property.

Consignee

The person or organization that receives property being transported by a carrier.

Which one of the following is true regarding the capacity of a minor to contract?

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

If an insurer develops a pattern or practice of ratifying unauthorized agents' actions, an agency relationship can

. Arise by implication.

Ida desperately needed to purchase homeowners insurance on her newly purchased dwelling. When she talked with Grace, an agent with Jancy's Insurance Company, Ida lied on the application when she denied having previous total fire losses. She also told Grace she had not had any previous total fire losses. Ida had recently been declined by three other companies for having previous total fire losses that were caused by physical hazards under Ida's control. The type of behavior that Ida has exhibited is called

. Concealment.

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

. Estoppel.

Which one of the following are examples of trade libel?

. False statements denying the plaintiff's title to the property Correct. An example of trade libel or product disparagement includes false statements denying the plaintiff's title to property.

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.

All of the following debts are not dischargeable in bankruptcy , EXCEPT:

. Payments owed on leases

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.

Agents generally cannot delegate to another party the authority granted by a principal. Which one of the following types of tasks represents an exception to this rule?

. Routine or mechanical tasks

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 true regarding the relationship between an insurer and a producer?

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

Which one of the following statements is true regarding insurance brokers? Select one: A. An insurance broker generally has actual authority to bind an insurer. B. The extent of producer authority for brokers is the same as that of general and special agents C. A broker can be both an insurer's agent and an insured's representative. D. The broker's principal is the insurer.

.Incorrect. A broker can be both an insurer's agent and an insured's representative. It can be an insurer's agent through apparent authority, and some state statutes allow it to collect premiums for the insurer.

Sequence of events leading to Estoppel

1. False representation of a material fact 2. Reasonable reliance on the representation 3. Resulting injury or detriment to the insured

An instrument must meet these four requirements under Article 3 of the UCC to be negotiable

1. Shows the signature of the drawer 2. contains an unconditional promise or order to pay a certain sum of money and no other promise, order, obligation, or power on the part of the drawer 3. Stipulates payment on demand or at a definite time 4. Notes payment to order or bearer

Paul v. Virginia

1896 that established that insurance is a contract delivered locally and governed by state law rather than federal law.

SouthEastern Underwriters Association et al (SEUA)

1944 case establishing that insurers conducting their activities across state lines are within the regulatory power of Congress under the commerce clause of the U.S. constitution

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. Equally liable with the other three companies that manufacture that specific type of tanker. C. 100 percent liable. D. Liable only if market share liability can be proven.

A. 20 percent liable. Incorrect. 20 percent. 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.

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.

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. A legal action can be brought through the courts for specific causes of action. B. The employee may appeal to the National Labor Relations Board for a claim review and a hearing. C. Both the employer and the employee may participate in the mediation process. D. The employee may seek restoration through arbitration.

A. A legal action can be brought through the courts for specific causes of action. Incorrect. A claim can be made if a contract of employment has been formed between the employer and the employee, or a legal action can be brought through the courts for specific causes of action (such as defamation). Alternative dispute procedures such as arbitration and mediation are not typically legal actions used to settle wrongful termination claims.

An insurance company may deny an insured's claim if the insured has misrepresented or concealed

A. A material fact. Correct. A material fact. In order to support a coverage denial based on concealment or misrepresentation, the fact or facts concealed or misrepresented must have been material—that is, information that would affect an insurer's decision to provide or maintain insurance or to settle a claim.

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.

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.

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.

Void contract

An agreement that despite the parties' intentions, never reaches contract status and is therefore not legally enforceable and binding.

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.

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

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

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. An innocent or injured party. B. Parties in privity of the contract. C. The offeree of the contract. D. The offeror of the contract.

A. An innocent or injured party. The right of avoidance is available only to an innocent or injured party and not necessarily to the offerer, offeree or all parties privy to the contract.

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.

Tenant Adam defaulted on his rent payments to landlord Leon. Adam left town and abandoned his personal property. Leon can treat Adam's abandoned property as an anticipatory breach Select one: A. And receive as damages the amount of the remaining rent payments. B. And invoke constructive eviction. C. But Leon cannot rent the property for at least 90 days subsequent to the property abandonment. D. But he has no recourse against Adam for rent payments.

A. And receive as damages the amount of the remaining rent payments. Incorrect. Leon may treat Adam's abandoned property as an anticipatory breach and receive the amount of the remaining rent payments as damages. Constructive eviction occurs when actions or inactions of a landlord prevent the tenant from enjoying a substantial or integral part of the premises. Leon retains his rights as landlord and may rent the property at will.

Internal Revenue Code Subpart F codifies which of the federal government's systems that leads to the taxation of certain kinds of foreign-source income in the year the company earned it, even though the U.S. parent company did not repatriate those profits during the year? Select one: A. Anti-deferral rules B. Tax haven rules C. Inversion rules D. Border tax adjustment rules

A. Anti-deferral rules Incorrect. The Subpart F codifies the government's system of anti-deferral rules. IRC Subpart F codifies the federal government's system of anti-deferral rules which lead to the taxation of certain kinds of foreign-source income in the year the company earned it, even though the U.S. parent company did not repatriate those profits during the year.

Antonia was a life tenant who occupied a house at 33 Main Street. Emil had a remainder interest in the property and planned to occupy it after Antonia's death. Antonia obtained property insurance covering the house, through Richley Insurance Co. The house was destroyed by fire during Antonia's life estate. Richley must pay the insurance policy proceeds to Select one: A. Antonia, because life tenants can recover the entire value of the property that they insure. B. Emil, under the doctrine of equitable conversion. C. Emil, because he will ultimately own the property. D. Antonia, since she occupied the house at the time of the fire.

A. Antonia, because life tenants can recover the entire value of the property that they insure. If property insured by a life tenant is destroyed, the life tenant can recover the entire value of the property, even if it exceeds the cash value of the life estate. Insurers often overlook this deviation from the principle of indemnity. Otherwise, they would be asserting a position inconsistent with having collected the premium that corresponds to the full value of the property.

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.

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.

Which one of the following parties is the holder of the warehouse receipt in a typical storage bailment? Select one: A. Bailor B. Bailee C. Carrier D. Warehouse operator

A. Bailor Bailor is the holder of the warehouse receipt in a typical storage bailment. A warehouse operator stores goods for hire. The storage arrangement is a bailment; the warehouse operator is the bailee; and the person/entity storing the goods is the bailor. Warehouse operators provide the goods' owner with a receipt that describes the amount, type, and condition of the goods and the conditions of storage. The receipt can be considered a document of title to the goods, which, if properly worded, becomes a negotiable instrument that can be traded, sold, swapped, or used as collateral for borrowing.

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.

As one of the directors of a large corporation, Kyle is accustomed to making various significant decisions on behalf of the corporation. Kyle is being sued for making investment decisions not authorized or supported by the stockholders, and he is concerned that as an officer and director that he could be held personally liable. Which one of the following statements regarding Kyle's and the corporation's potential liability is correct? Select one: A. Both the corporation and Kyle could be held liable under tort law. B. Only Kyle would be held liable for his unauthorized investment decisions. C. Neither Kyle nor the corporation can be held liable because of corporate errors and omissions coverage. D. Only the corporation would be liable for Kyle's action as he is protected under the doctrine of respondeat superior.

A. Both the corporation and Kyle could be held liable under tort law. Kyle and the corporation can be liable under tort law. The corporation is liable as a principal.

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.

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

A. Case law. Incorrect. Contracts may be illegal because they are contrary to constitutional, statutory, or case law or because they are against public policy.

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.

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.

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.

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.

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. De facto merger B. Share exchange C. Tender offer D. Takeover

A. De facto merger Incorrect. A way to complete a merger is for a corporation to sell all or most of its shares in return for the purchaser's shares. This transaction constitutes a merger in fact, if not in law, and is called a de facto merger. A takeover is an assumption of control by one company over another. In a share exchange, a corporation acquires all of another corporation's outstanding stock in return for shares of the acquiring corporation. A tender offer is an offer to another corporation's shares to purchase their stock.

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

At Gulford's Plant Store, Lucille, a sales clerk, was authorized by Gulford's to sell plants and service customers offering advice on Gulford's gardening products. The authority given by Gulford to Lucille is called Select one: A. Express authority. B. Direct authority. C. Implied authority. D. Actual authority.

A. Express authority. Express authority is the actual authority conferred by a principal on an agent through specific instruction including acts incidental to carrying out those instructions.

During Hurricane Katrina, Jancy Cajun Cooks was unable to ship out its famous spices to Taunton's Restaurant in Virginia. Which one of the following is an excuse for nonperformance of this sales contract? Select one: A. Failure of a presupposed condition B. Unavailability of agreed upon shipping C. Loss of goods by disaster D. Unforeseen disaster circumstances

A. Failure of a presupposed condition Impracticality because of a failure of a presupposed condition. A seller of goods need not complete the sale if the performance becomes commercially impracticable. A severe shortage of materials by a natural disaster can cause commercial impracticability.

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.

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.

The stockholders of BoxComp sued the former chief executive officer (CEO) over his alleged corruption. During the trial, the plaintiff stockholders called the defendant CEO's secretary to the stand to testify. The secretary testified that one of her friends told her that the CEO stole corporate money to gamble on horse races. The CEO's attorney's objection would be sustained on which one of the following grounds? Select one: A. Hearsay B. Irrelevant C. Immaterial D. Prejudicial

A. Hearsay Rules of evidence require evidence be relevant, material, and competent. They also prohibit hearsay, the admission at trial of out-of-court statements not made under oath by a person who is unavailable to testify. There are evidentiary exceptions to the hearsay rule.

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.

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

InsurCo executives are concerned about some new legislation so they write to their state's department of insurance for guidance. The department writes back with advice about the new law. When an administrative agency clarifies statutes for regulated parties, it is writing which one of the following? Select one: A. Interpretive rule, and it is non-binding. B. Legislative rule, and it is non-binding. C. Legislative rule, and it is binding on the regulated parties. D. Interpretive rule, and it is binding on the regulated parties.

A. Interpretive rule, and it is non-binding. Incorrect. Interpretive rules interpret statutes and provide guidance for agency staff or regulated parties, but they are not binding on individuals.

The Jet Hotel had an old, dangerous boiler in the basement that was rarely used. The Occupational Health and Safety Administration (OSHA) had no safety standards for this particular boiler, but did have standards for similar pieces of equipment. The Jet Hotel's management took no steps to make the boiler safe. One day, the boiler exploded. No one was seriously hurt, but nine employees were treated with first aid. The management did not record these injuries or report the accident to OSHA. Which one of the following OSHA requirements or standards has the management violated? Select one: A. The general duty clause B. The reporting requirement C. The recordkeeping requirement D. The specific safety standard for boilers

A. The general duty clause

IronCo was a security contractor that provided security specialists for corporations. Because of the nature of the business, IronCo executives were extremely concerned about trustworthiness. A high-ranking position opened up at IronCo, and in order to apply for the job, interviewers requested interviewees to take a polygraph test. The results of the test were used to determine who was most qualified for the job. The interviewer did not accept anyone who refused to take the test. Which one of the following best describes whether IronCo violated the Employee Polygraph Protection Act? Select one: A. IronCo cannot request or use polygraph tests and cannot test. B. The act does not prohibit the use of polygraphs on job applicants, only on current employees. C. IronCo cannot base employment decisions solely on the outcome of polygraph tests. D. The act does not apply to private-sector employers in an industry dealing with security.

A. IronCo cannot request or use polygraph tests and cannot test. The act bars most private-sector employers from requiring or even requesting lie detector tests.

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.

Uniform Commercial Code (UCC) Article 7 concerns documents of title. Which one of the following is an element necessary for a document to be considered a title? Select one: A. It is a contract to ship or to store goods. B. It is in a tangible rather than an electronic format. C. It is negotiable as a type of commercial paper. D. It is created by a bailor as a receipt for goods received.

A. It is a contract to ship or to store goods. These elements are necessary for a document to be considered a title: it is a contract to ship or store the goods; it is created by the bailee (carrier or warehouse operator) as a receipt for goods received; and, if it is negotiable, it contains a statement that: the holder has the right to receive, hold, and dispose of both the goods and the document of title and that the purchaser of the title does so free of claims and defenses of prior parties.

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.

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

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.

John contracts with Rex to purchase three steel braces by April 5. In the contract, they agree that the amount of damages either of them would pay in the event of breach would be $50,000. The $50,000 is the result of their good faith effort to estimate actual damages that probably would result from a breach. These types of damages are known as Select one: A. Liquidated damages. B. Special damages. C. Punitive damages. D. Equitable remedies.

A. Liquidated damages. These liquidated damages are a reasonable estimation of actual damage in the event of breach or for negligence. Liquidated damages are a reasonable estimation of damages, agreed to by contracting parties and included in the contract, to be paid in the event of a breach or for negligence.

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.

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. Management. B. Rights of members. C. Type of association D. By-laws.

A. Management. Incorrect. The statutes creating such involuntary associations frequently specify the means of formation, financing, and management.

Which one of the following can occur when a member of an association has suffered damage to person, property, or reputation through the tortuous conduct of another member or of an agent of the association? Select one: A. Member or agent can be sued individually B. Association can be sued C. Association, member, or agent can be sued D. Member can be sued

A. Member or agent can be sued individually A member who has suffered damage to person, property, or reputation through the tortuous conduct or another member or of an agent can sue the other member or agent individually.

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.

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

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

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

A. Must know of the breach of the condition. An insurer must know of a breach of condition under the policy before it can waive that condition. Once it has knowledge of a breach, the insurer must act immediately to avoid a waiver. Whether the insurer has waived a right depends on the facts of each case.

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.

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.

What are settlements?

Agreements between both parties to end a case without going to trial.

Jack was the defendant in a lawsuit against Emily. Emily's properly-formed complaint alleged that Jack made a series of embarrassing mistakes that led to the accidental destruction of Emily's boat. The way Jack remembers it, Emily sunk her own boat with her own incompetence. Jack disputes almost every one of Emily's allegations. Aside from voluntary dismissal by Emily, is there any way Jack can win the case before trial? Select one: A. No, because Jack disputes Emily's allegations. B. No, because a voluntary dismissal is the only way Jack can win before trial. C. Yes, a motion to dismiss for failure to state a claim. D. Yes, a motion for judgment on the pleadings.

A. No, because Jack disputes Emily's allegations. A motion to dismiss argues that the plaintiff has failed to state a claim upon which relief can be granted and a motion for judgment on the pleadings generally requires an admission of the other party's facts and allegations.

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 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

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. Not possible because states cannot preempt the federal OSH Act with their employee health and safety statutes. B. Complete by creating laws that were at least as effective as those developed by the OSH Act. C. Competitive merely by issuing a statement of intent, signed by the governor. D. Incomplete because West Virginia still needs the approval of the Occupational Safety and Health Administration.

A. Not possible because states cannot preempt the federal OSH Act with their employee health and safety statutes. States may assume exclusive jurisdiction by developing and enforcing job safety programs that are at least as effective as OSHA's, and they need OSHA's permission.

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. Not repudiated the contract. B. Voided the contract. C. Rescinded the contract. D. Breached the contract.

A. Not repudiated the contract.

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

A. Only as specified within the bailment agreement or contract. In bailments for mutual benefit, the bailee can use the property only as specified within the bailment agreement or contract. For ex., a person who leases a car can use it only according to the lease agreement's terms.

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.

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. Payment of different wage rates is not allowed if sex is the employer's real basis for the wage differential. B. The Equal Pay Act prohibits employers from paying different wage rates to different sexes for the same job, no matter the system implemented. C. The act only applies to race, not to sex or gender, which is covered by other civil rights acts. D. A wage differential is acceptable if it reflects the quality of work, regardless of the employer's actual reasons for setting wages.

A. Payment of different wage rates is not allowed if sex is the employer's real basis for the wage differential. A wage differential is only allowed when the employer's wage system is based on factors other than sex.

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.

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. Payment of different wage rates is not allowed if sex is the employer's real basis for the wage differential. B. The Equal Pay Act prohibits employers from paying different wage rates to different sexes for the same job, no matter the system implemented. C. The act only applies to race, not to sex or gender, which is covered by other civil rights acts. D. A wage differential is acceptable if it reflects the quality of work, regardless of the employer's actual reasons for setting wages.

A. Payment of different wage rates is not allowed if sex is the employer's real basis for the wage differential. Incorrect. A wage differential is only allowed when the employer's wage system is based on factors other than sex.

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.

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.

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 if Richley has insurance covering her conduct. C. Accept Charlotte's argument because only Richley can be liable in tort under these facts. 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. Incorrect. 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.

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.

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.

Ralph is the director of a fraternal organization that is a not-for-profit association. Ralph volunteers his time to manage the organization, and he is not paid a salary nor does he receive any type of non-monetary compensation. Which one of the following statements regarding Ralph's role as director of the fraternal association is true? Select one: A. Since Ralph receives no compensation, his standard of care owed to the association is less than that of a compensated corporate director. B. Ralph, as a member of the fraternal association, has no property rights in the association's assets. C. As an association director, Ralph has legal rights and duties that differ from those of a corporate director. D. Ralph cannot be sued by a member of the association but the fraternal association itself may be sued by a member who has suffered damage.

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

Which one of the following zoning exceptions would be needed to build a church in an area zoned for single family houses? Select one: A. Special B. Standard zoning C. Spot zoning D. Religious

A. Special Incorrect. A special zoning exception would be needed to build a church in an area zoned for single family houses. A special exception is a land use explicitly permitted by a zoning ordinance but subject to certain limitations.

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.

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.

To perfect a security interest in a negotiable instrument, one should Select one: A. Take actual possession of the instrument. B. Create a document of constructive notice. C. Negotiate a termination statement with the debtor. D. File a finance statement in the proper county office.

A. Take actual possession of the instrument. Transferring actual possession is the only way to perfect a security interest in a negotiable instrument, such as a bearer bond, because delivery transfers ownership

Joshua has received a final order from the Social Security Administration and would like to request a judicial review. Before a judicial review of the case can occur, Joshua must Select one: A. Take his case through all possible administrative procedures and appeals. B. Pay all court fees and penalties. C. Prove that the action was unconstitutional. D. Participate in alternative dispute resolution procedures.

A. Take his case through all possible administrative procedures and appeals. Before a judicial review of the case can occur, Joshua must take his case through all possible administrative procedures and appeals under the doctrine of exhaustion of administrative remedies.

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

Which one of the following statements correctly explains insurance regulation today? Select one: A. The McCarran-Ferguson Act largely permits the regulation of insurance companies to be carried out by individual states. B. The federal government cannot regulate insurance transactions because of the ruling in South-Eastern Underwriters Association, et al., (SEUA). C. The Sherman Antitrust Act is applicable to the business of insurance to the extent that such business is not regulated by federal law. D. The federal government cannot regulate insurance transactions because of the Supreme Court's ruling in Paul v. Virginia.

A. The McCarran-Ferguson Act largely permits the regulation of insurance companies to be carried out by individual states. The McCarran-Ferguson Act largely permits the regulation of insurance to be carried out by individual states. In 1869, Paul v. Virginia said states regulate insurance. In 1944, the SEUA case said no, regulating insurance is a federal power. Congress thought states do it best, so it delegated the authority to the states in the McCarran-Ferguson Act. The federal Sherman Antitrust Act applies to the extent that the states are not regulating the business of insurance.

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.

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.

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 contract is enforceable except for the salary forfeiture provision, which is unconscionable. B. The agreement is completely unenforceable, because it is a wagering contract. C. The contract is an in pari delicto agreement, and, as such, is completely enforceable, because both parties are equally at fault. D. The agreement is completely unenforceable, because it was made for an unlawful purpose—that is, to commit a tort against the dean.

A. The contract is enforceable except for the salary forfeiture provision, which is unconscionable. 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.

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.

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.

Though the United States federal legislative branch is often said to be responsible for "creating" the law, the truth is that much of U.S. law is created by federal agencies. Which one of the following describes how the legislative delegation of rulemaking power to an administrative agency constitutional? Select one: A. The delegation must be carefully limited in scope, and rules made by the agency must be subject to judicial review.Correct. Administrative agencies are only constitutional if the legislation carefully defines the scope of the agency's power, the agency only operates within that scope, and the rules are subject to judicial review. B. All federal agencies are created by constitutional amendment. C. The U.S. Constitution explicitly mandates the creation of administrative agencies. D. Federal administrative agencies must be directly approved by the U.S. Supreme Court before they can create rules.

A. The delegation must be carefully limited in scope, and rules made by the agency must be subject to judicial review. Administrative agencies are only constitutional if the legislation carefully defines the scope of the agency's power, the agency only operates within that scope, and the rules are subject to judicial review.

If a partnership and all of the partners are insolvent, federal bankruptcy law permits partnership creditors to enter Select one: A. The full amount of their claims against both the partnership assets and each individual insolvent partner's assets. B. Their pro rata share of the total amount owed to all creditors against the partnership assets and each individual insolvent partner's assets C. The full amount of their claims against partnership assets. D. Their pro rata share of the total amount owed to all creditors against the partnership assets.

A. The full amount of their claims against both the partnership assets and each individual insolvent partner's assets. .Incorrect. Federal bankruptcy law permits partnership creditors to enter the full amount of their claims against both the partnership assets and each individual insolvent partner's assets.

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

Mini-trials and summary mock jury trials are creative methods sometimes used to foster communication and settlement between opposing parties. Sometimes these proceedings offer advisory opinions. Which one of the following best explains how the parties can use these opinions? Select one: A. The opinions are only useful in terms of influencing negotiation between the parties. B. These opinions are final and valid since the parties agreed to use the mini-trial or summary mock jury trial. C. These opinions are binding only when the parties have a preexisting arbitration agreement. D. The opinions can be used as persuasive evidence for any future potential litigation.

A. The opinions are only useful in terms of influencing negotiation between the parties. Private mini-trials and court-sponsored mock summary jury trials can encourage negotiation and settlement, but are otherwise non-binding.

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.

Which one of the following is the major power of legislative bodies in the United States? Select one: A. The power to enact laws B. The power to review court decisions C. The power to appoint judges D. The power to declare laws unconstitutional

A. The power to enact laws

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.

In the foreign exchange markets, rate fluctuations usually are linked to

A. The world economy or significant events in a specific national economy

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.

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 do not enforce them. B. They generally require them. C. They always enforce them. D. They generally enforce them.

A. They generally do not enforce them. Incorrect. Courts generally do not enforce policy provisions requiring all waivers to be in writing, even though waiver is based on the contract principle that courts will enforce valid contractual provisions. Permitting insurers to negate the defense of waiver simply by inserting these policy provisions would defeat the law of waivers entirely.

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 Emilia did not communicate her acceptance before June 8. B. Tobias's offer lapsed because he did not receive Emilia's acceptance before June 8. C. Tobias's offer terminated as an operation of law upon the passage of the June 8 law. D. Tobias's offer terminated as an operation of law when the executor took charge of Tobias's estate.

A. 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.

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

Which one of the following statements about state unfair trade practices acts is true? Select one: A. Unlike the Federal Trade Commission Act, many of the state unfair trade practices acts apply to insurance.Correct. Unlike the Federal Trade Commission Act, many of the state unfair trade practices acts apply to insurance. B. State unfair trade practices acts only regulate insurance practices that involve boycott, coercion, or intimidation. C. Very few state unfair trade practices acts follow the National Association of Insurance Commissioners' model Insurance Fair Trade Practices Act. D. Most state unfair trade practices acts remove consumer rights to sue businesses that the Federal Trade Commission Act provides.

A. Unlike the Federal Trade Commission Act, many of the state unfair trade practices acts apply to insurance.

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.

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?

Which one of the following most accurately explains the debtor's right to redeem collateral upon the debtor's default? Select one: A. When the collateral is in the possession of the defaulting debtor, the debtor can pay the amount of the debt that is in default plus reasonable expenses incurred by the secured party to redeem the collateral. B. When the collateral is in the possession of the foreclosing creditor, the debtor can pay the amount of the debt that is in default plus reasonable expenses incurred by the secured party to redeem the collateral. C. Upon default, the debtor must pay the entire remaining debt to redeem the collateral, but the debtor only has the right to redeem if the secured transaction expressly grants it to the debtor. D. Upon default, the debtor must pay the entire remaining debt to redeem the collateral, and the debtor always has the right to redeem under the Uniform Commercial Code (UCC).

A. When the collateral is in the possession of the defaulting debtor, the debtor can pay the amount of the debt that is in default plus reasonable expenses incurred by the secured party to redeem the collateral. When the collateral is in the possession of the defaulting debtor, the debtor can pay the amount of the debt that is in default plus reasonable expenses incurred by the secured party to redeem the collateral. The borrower doesn't have to repay the entire remaining debt, only the amount that is in default to bring the debt current.

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.

Mediation

ADR method using neutral party to reach settlement.

Forbearance

Act of giving up or promising to give up a legal right.

Can you list the legal procedures of administrative agencies?

Administrative agencies' legal procedures include the rulemaking function, the adjudicatory function, investigative powers, and judicial review.

What is the body of administrative law?

Agency rules, regulations, and rulings.

Three characteristics of a binding insurance contract

Agreement policy content Delivery

Suing a third party for damages alleging the other party brought the demise of the marriage is called ________ laws.

Alienation of affection

Personal property

All tangible or intangible property that is not real property.

Improvements and Betterments

Alterations or additions made to the building at the expense of an insured who does not own the building and who cannot legally remove them

Nuisance per se

Always a nuisance, regardless of location or surroundings.

What is mediation?

An ADR method where disputing parties use a neutral outside party to develop a settlement.

Ultra Vires

An act of a corporation that exceeds its chartered powers.

gross negligence

An act or omission that completely disregards the safety or rights of others and is exaggerated or aggravated in nature.

Occupational safety and health act of 1970 (OSHA)

An act passed by Congress in 1970 to ensure every employee a safe place to work by setting safety standards for employers and imposing penalties for violation of the standards.

Governmental function

An act that can be performed only by the government.

negligence per se

An act that is considered inherently negligent because of a violation of a law or an ordinance.

Ministerial act

An act that is directed by law or other authority and that requires no individual judgment or discretion about whether or how to perform it.

Administrative Act

An act, a decision, a recommendation, or an omission made by a government official or agency within the authority of that office or agency.

Intervening act

An act, independent of an original act and not readily foreseeable, that breaks the chain of causation and sets a new chain of events in motion that causes harm.

Nuisance per se

An act, occupation or structure that is a nuisance at all times and under any conditions, regardless of location or surroundings

public nusance

An act, occupation, or structure that affects the public at large or a substantial segment of the public; interfering with public enjoyment or rights regarding property.

ultrahazardous activity

An activity so inherently dangerous that those who undertake the activity and cause injuries are strictly liable.

What is an interpretative rule?

An administrative agency rule that interprets statutes but lacks the force of law.

What is a procedural rule?

An administrative agency rule that prescribes procedures for agency operations.

What is a legislative rule?

An administrative agency rule with the same force as a law.

What is a final order?

An administrative agency's conclusion or disposition of a material private right.

Final Order

An administrative agency's final conclusion or disposition of any material private right of a party, terminating an agency proceeding.

Agency by estoppel

An agency relationship created by a principal's words or conduct that cause a third party to reasonably believe that an agency exists.

General Agent

An agent that transacts all of a principal's business of a particular kind or in a particular place.

Accord and satisfaction

An agreement (Accord) to substitute performance other than that required in a contract and the carrying out of that agreement. (Satisfaction)

What is accord and satisfaction?

An agreement (accord) to substitute performance other than that required in a contract and the carrying out of that agreement (satisfaction).

What is a noncompete agreement?

An agreement between an employer and employee to protect the employer's interests after termination.

Legally enforceable

An agreement that can be enforced by law if one party fails to fulfill their obligations.

d

An insurance company determines that inaccurate information has been provided by an insurance applicant. Which one of the following statements is true concerning whether the contract is voidable? Choose one answer. A. If the information was false or misleading and material, the contract is voidable. B. If the information was made in good faith, with no intent to misrepresent, the contract is not voidable. C. If the information was related to a material fact but corrected in the first 60 days, the contract is not voidable. D. If the information was false and related to a material fact and relied upon by the insurer, the contract is voidable.

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.

Reservation of rights letter

An insured's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it

Bad faith

An insurer's intention or reckless act or denial of coverage without proper cause, often causing emotional distress and resulting in extracontractual and or punitive damages

Intentional infliction of emotional distress

An intentional act causing mental anguish that results in physical injury

Product disparagement or trade libel

An intentional false and misleading statement about a characteristic of a plaintiff's product, resulting in financial damage to the plaintiff.

Fraud

An intentional misrepresentation resulting in harm to a person or an organization

What is a security interest?

An interest in property that allows it to be sold on default.

Insurable interest

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred.

What is insurable interest?

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred.

Life estate

An interest in which a person, called a life tenant, is entitled to possession of real property and to all income the land produces for the duration of that person's or someone else's life; the interest terminates on the death of the life tenant (or of the other person during whose life the life tenant possesses the property) and does not pass to his or her estate.

Implied Warranty

An obligation that the courts impose on a seller to warrant certain facts about a product even though not expressly stated by the seller

Utmost good faith

An obligation to act in complete honesty and to disclose all relevant facts.

What is utmost good faith?

An obligation to act in complete honesty and to disclose all relevant facts.

Tender

An offer to perform one's duties under a contract

Which one of the following statements regarding an agent's duties to a principal is true?

An original agent is responsible to the principal for any subagent's violation of duty.

Common stock

An ownership interest in a corporation gives stock owners certain rights and privileges, such as the right to vote on important corporate matters and to receive dividends.

Interference with employment

An unjustified intentional act that interferes with another's valid or expected business relationship.

Private nuisance

An unreasonable and unlawful interference with another's use or enjoyment of his or her real property.

What can the federal government regulate in business?

Any aspect necessary for the nation's economic needs.

Contract of adhesion

Any contract in which one party is put in a "take-it-or-leave-it" position and must either accept the contract as written by the other party or reject the contract entirely.

What is a contract of adhesion?

Any contract in which one party is put in a "take-it-or-leave-it" position and must either accept the contract as written by the other party or reject the contract entirely.

Insurance producer

Any of several kinds of insurance personnel who place insurance business with insurers and who represent either insurers or insureds, or both.

Nuisance

Anything interfering with another person's use or enjoyment of property.

Sales contracts are governed by

Article 2 of the uniform commercial code (UCC)

An insurer should attempt to enter into a nonwaiver agreement with the insured

As soon as the potential coverage question surfaces.

Acceptance

Assent to an offer by agreeing or doing what is proposed.

What is constructive notice?

Assumed knowledge gained through reasonable observation.

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?

Assumption of risk

Actual Authority

Authority (express or implied) conferred by the principal on an agent under an agency contract.

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

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.

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.

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.

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).

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.

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.

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.

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.

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.

Physician Betty administered medical services to stroke victim Karl who was unconscious. She provided medication and direction and followed all procedures. When Karl woke up, he refused other medical services and he also indicated that he could not be held liable for any expenses that he did not personally authorize or to which he did not consent. It is likely that Karl might be required to pay the reasonable value of the services received based on Select one: A. A unilateral contract. B. An implied-in-law contract. C. An executory contract. D. An implied-in-fact contract.

B. An implied-in-law contract. This is typical of an implied-in-law contract and not of an implied-in-fact, unilateral, or executory contract. If a doctor renders professional services to an unconscious person then the law might obligate the patient to pay for those services based on an implied-in-law contract, to avoid unjust enrichment.

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.

Corporation X contracted to sell shares owned by a corporate director. Upon learning of the sale, the director asserted that the attempted contract was not within the corporate powers of Corporation X. The term most descriptive of this type of contract is which one of the following? Select one: A. A non-executory contract B. An ultra vires contract C. An implied-in-fact contract D. An option contract

B. An ultra vires contract It would be an ultra vires contract. Most states have abolished the defense of ultra vires, but courts often use the term when discussing corporate concepts in written decisions. Traditionally, an attempted contract that was not within corporate powers was voidable as an ultra vires contract, meaning a contract "beyond its power."

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.

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.

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

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. At the time of loss. C. When the loss is reported. D. When the property is acquired.

B. At the time of loss. The insurable interest must exist at the time of loss. (In property-casualty insurance, the insurable interest must exist at the time the loss occurs. In contrast, the insurable interest in a life must exist at the time the applicant obtains insurance coverage.)

Nancy suffered a loss and contacted her insurer, Autumn Co. Autumn Co. sent a nonwaiver agreement to Nancy's workplace, but she refused to sign. Autumn Co. then attempted to send a reservation of rights letter to Nancy's residence, but it accidentally sent the letter to the wrong address. Autumn Co. also sent a letter to Nancy's boyfriend, a third-party claimant, at his workplace. This jurisdiction did not require insurers to send reservation of rights letters to third-party claimants. Which one of the following correctly identifies whether Autumn Co. has effectively protected its rights? Select one: A. Autumn Co. has effectively protected its rights by notifying Nancy's boyfriend, even though it was not required by the jurisdiction. B. Autumn Co. has not effectively protected its rights because it cannot show that it communicated notice to the insured. C. Autumn Co. has effectively protected its rights because it acted in good faith and made every reasonable effort to contact the insured. D. Autumn Co. has effectively protected its rights because Nancy was put on notice by the nonwaiver agreement, even though she refused to sign it.

B. Autumn Co. has not effectively protected its rights because it cannot show that it communicated notice to the insured. Incorrect. Autumn Co. has not effectively protected its rights because it cannot show that it communicated notice to the insured. Had it sent the letter to the right address, it could have had a return receipt, and if by regular mail as well, a presumption of receipt.

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.

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.

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.

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

B. By court action on the application of creditors Incorrect. Unincorporated associations can be dissolved in several ways, including by court action on the application of creditors or members, or for illegal conduct.

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

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.

Scott is presented as a witness for the plaintiff in a trail. Carla, the plaintiff, alleges that she was seriously injured when she was struck by a vehicle driven by Luke, who was under the influence of alcohol at the time. Scott testifies that Luke had been drinking heavily at happy hour on the day of the accident. Under cross-examination, Scott admits that he was not actually at the happy hour, but that a number of co-workers had told him about Luke's drinking that day. Scott's testimony may be challenged under which one of the following conditions under the rules of evidence? Select one: A. Material B. Competent C. Favorable D. Relevant

B. Competent Scott's testimony may be challenged on the basis of competence. He is repeating a statement (hearsay), but does not have personal knowledge of whether the statement is true.

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

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

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.

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. D. Suspend Filip's binding authority.

B. Confirm the transaction. Incorrect. If a person acts as an agent to one who has given no actual consent or authority, the principal has two options: (1) ratify or confirm the transaction or (2) refuse to approve the purported agent's unauthorized acts.

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.

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.

Anna is the lawyer for the plaintiff in a jury trial. She is preparing her opening statement. Which one of the following correctly describes what Anna should do during her opening statement? Select one: A. During her opening statement, Anna should instruct the jury about any applicable laws. B. During her opening statement, Anna should present a summary of what she expects to prove. C. During her opening statement, Anna should challenge the testimony and evidence of the defendant. D. During her opening statement, Anna present a summary of all of the evidence that she plans to present.

B. During her opening statement, Anna should present a summary of what she expects to prove. During her opening statement, Anna should present a summary of what she expects to prove. She should summarize the evidence during her closing statement.

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.

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.

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.

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.

Checks are the most familiar negotiable instruments. Which one of the following is a common check transaction?

B. Failure to honor checks

Checks are the most familiar negotiable instruments. Which one of the following is a common check transaction? Select one: A. Customer's death or incompetence B. Failure to honor checks C. Certification check D. Endorser signatures

B. Failure to honor checks A bank is liable for all damages caused by its failure to honor a check when the depositor's account contains sufficient funds.

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.

Aaron's vehicle was rear-ended by Kaito's vehicle, and Kaito was charged with driving too fast for conditions. Aaron agreed not to sue Kaito in exchange for a sum of money from Kaito's insurance company. This situation illustrates an example of Select one: A. Past consideration. B. Forbearance. C. Good consideration. D. Binding promise.

B. Forbearance. Forbearance is the giving up or the promise to give up a legal right and is sufficient to support a contract. Forbearance constitutes valuable consideration in this example.

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.

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

B. General agent. Incorrect. An agent that transacts all of a principal's business of a particular kind or in a particular place is a general agent.

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?

B. Greater burden on the third party

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

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.

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.

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.

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.

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 be liable for breach of contract if she terminated Sandy without good cause. C. Melissa would still be free to terminate Sandy for any reason or no reason because of the employment-at-will doctrine. D. Melissa would still be free to terminate Sandy for any reason or no reason because of the employment contract.

B. 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.

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

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.

For an insurer to waive the insured's breach of condition under the insurer's policy, the insurer

B. Must know of the breach of the condition.

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.

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. Truthfulness B. Mutual trust C. Honesty D. Ethical behavior

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

Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy was a car loan financed by Lending Bank for $8,000. Which one of the following must Merve do to enforce a new promise to pay this debt and make payments once again on this contract? Select one: A. She must acknowledge the debt. B. No additional consideration is required. C. She must make no additional promises to pay. D. She must pay additional consideration.

B. No additional consideration is required. A new promise to pay a debt barred by bankruptcy is enforceable without any additional consideration.

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.

The City of Denbar contracts with Water Company to maintain adequate water pressure in its fire hydrants. Bob's home in Denbar catches fire and cannot be saved due to inadequate water pressure. What rights does Bob have under Denbar's contract with Water Company? Select one: A. Bob has enforceable rights under the contract that Denbar negotiated on behalf of its citizens. B. None, because Bob is an incidental beneficiary with no enforceable rights. C. Bob is a third-party beneficiary to the contract with fully enforceable rights. D. None, because the contract is with Denbar and Bob is not a named beneficiary.

B. None, because Bob is an incidental beneficiary with no enforceable rights. Incorrect. Bob has no rights under Denbar's contract with Water Company, because Bob is an incidental beneficiary with no enforceable rights. Any duty to Bob is, at best, indirect.

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

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

B. Numerosity, commonality, typicality, and adequacy of representation. In this type of a class action the court must consider the elements of numerosity, commonality, typicality, and adequacy of representation. The named parties must fairly and adequately protect the interests of unnamed class members.

William owned a hotel, a bar, and a convenience store, all located within the same strip mall. He had a policy to turn away any prospective customer with brown hair. Adam sought lodging but was refused a room by William because he had brown hair. Adam then went to the convenience store, but the worker employed by William also refused to serve him. Adam finally ended up at the bar where he was served a few drinks. Adam became unruly, and the bartender threw him out. He walked back to the hotel, and William had Adam removed from the property. How many common law causes of action does Adam have against William for the refusal to furnish services at public places?

B. One

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

Exhaustion of administrative remedies

The completion of all possible administrative procedures and appeals in a case; Required before a party can appeal an agency action to a court.

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.

All of the following debts are not dischargeable in bankruptcy, EXCEPT: Select one: A. Services obtained by fraud B. Payments owed on leases C. Most student loans D. Alimony

B. Payments owed on leases Incorrect. Payments owed on leases. The rest are not dischargeable.

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

Promissee

The part to a contract to whom a promise is made

Who is the defendant?

The party defending against the complaint in a lawsuit.

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.

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.

transactions between agents or disclosed principals and third parties, the principals have Select one: A. Rights to be determined in court when damages are assessed. B. Rights against third parties to the same extent as if the principal conducted the transaction. C. No rights against third parties. D. Rights against third parties involved in the transaction.

B. Rights against third parties to the same extent as if the principal conducted the transaction. In transactions between agents and disclosed principals and third parties, the principals have rights against third parties to the same extent as if the principal conducted the transaction.

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

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.

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.

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.

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.

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. Self-incrimination subpoena B. Subpoena duces tecum C. Final order subpoena D. Subpoena ad testificandum

B. Subpoena duces tecum The DOI is using a subpoena duces tecum, which is subpoena to compel production of documents or records. A subpoena ad testificandum is a subpoena to compel a witness to testify.

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

B. Subrogation Subrogation provisions clarify that the insured cannot collect from both the insurer and the responsible party for more than the amount of the loss. The principle of indemnity means that insurance policies should provide a benefit no greater than the loss suffered by an insured. With a valued policy, an exception to the principle, the actual value of the loss does not matter and the recovery could be more than the insured item is worth. The remaining answer choices can be deduced as wrong. A replacement cost provision is an exception to the principle of indemnity as the insured can end up better off because the insured item is usually worth less (because of depreciation or wear and tear) than the cost to replace it. Limits are caps on what an insurer must pay.

Victoria dared her friend, Amy, to jump over a moving car on her bicycle. Amy agreed, and Victoria drove the car. It did not turn out well. The car was damaged, and Amy was injured. Amy's lawyer predicted that she would be found 50 percent at fault. Which one of the following comparative negligence rules would be most helpful to Amy's case if she decided to sue Victoria? Select one: A. The contributory negligence rule B. The 50 percent comparative negligence rule C. The 49 percent comparative negligence rule D. The slight versus gross rule

B. The 50 percent comparative negligence rule Incorrect. The 50 percent comparative negligence rule would be the most helpful to Amy's case if she decided to sue Victoria, because it would allow her to recover at least reduced damages up to the point at which the plaintiff's negligence constitutes not more than 50 percent of the total.

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.

Which one of the following provisions of the U.S. Constitution gives the federal Congress the power to regulate insurers that conduct business in more than one state? Select one: A. The Equal Protection Clause B. The Commerce Clause C. The Necessary and Proper Clause D. The Due Process Clause

B. The Commerce Clause The Commerce Clause gives the federal Congress the power to regulate insurers that conduct business in more than one state. The Due Process Clause guarantees notice and a hearing before being deprived of certain rights. The Equal Protection Clause prohibits certain kinds of unfair discrimination. The Necessary and Proper Clause concerns congressional powers and is not addressed in this course.

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 Gramm-Leach-Bliley Act B. The Health Insurance Portability and Accountability Act C. The Federal Information Security Management Act D. The Cybersecurity Information Sharing Act

B. The Health Insurance Portability and Accountability Act The Health Insurance Portability and Accountability Act is particularly important for employees in the claims department. The Cybersecurity Information Sharing Act protects companies that voluntarily share information regarding cyber threats with federal, state, and local authorities.

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..

Luke violated a new environmental statute in Massachusetts that prohibited the unsafe disposal of batteries. Because the statute was new, there was no precedent for violations of this particular law. Other, similar Massachusetts statutes prohibited the unsafe disposal of computers and lead-based paint, and there were prior cases that analyzed those laws. Both Rhode Island and Nevada had the same battery disposal statute as Massachusetts. These states each had precedential cases that analyzed violations of their own battery disposal law. Which one of the following correctly identifies the primary legal authority that the Massachusetts' court should rely upon when analyzing Luke's case? Select one: A. The court should rely on precedent from Rhode Island's battery disposal cases. B. The court should rely on prior cases that analyzed similar Massachusetts statutes, such as those that dealt with the disposal of computers and lead-based paint. C. Because there is no direct precedent, the court should rely only on the statute itself and general criminal law principles. D. The court should rely on precedent from Nevada's battery disposal cases.

B. The court should rely on prior cases that analyzed similar Massachusetts statutes, such as those that dealt with the disposal of computers and lead-based paint. Incorrect. The court should rely on prior cases that analyzed similar Massachusetts statutes, such as those that dealt with the disposal of computers and lead-based paint. Generally, this process is called synthesis.

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

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

Joshua, owner of Pravait Interior Design, ordered 25 director chairs from Mellfor's Chairs. Mellfor's did not deliver the chairs in six weeks as promised. Which one of the following is the type of remedy to which Joshua is entitled? Select one: A. The market price plus shipping expenses at the time of breach B. The difference between the contract price at the time the buyer learned of the breach and the market price C. The replacement price from another manufacturer plus shipping expense D. The contract price plus shipping expenses at the time of breach

B. The difference between the contract price at the time the buyer learned of the breach and the market price Incorrect. If the seller fails to deliver the goods or repudiates the contract, the buyer is entitled to the difference if any between the contract price at the time the buyer learned of the breach and the market price.

Which one of the following is a necessary element for a document to be considered a title under Uniform Commercial Code (UCC) Article 7?

B. The document is created by the bailee as a receipt for goods received

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

The U.S. constitutional system is one of various checks and balances to governmental power. Which one of the following describes how the legislative branch checks the judicial branch? Select one: A. The legislative branch is responsible for developing and enforcing laws that the judicial branch creates with its decisions. B. The legislative branch has the power to approve or deny the executive appointment of judges, and it has the ability to pass constitutional laws that may negate judicial decisions. C. The legislative branch has the power to appoint judges and to amend the U.S. Constitution. D. The legislative branch has the power to recommend, approve, or veto judicial decisions.

B. The legislative branch has the power to approve or deny the executive appointment of judges, and it has the ability to pass constitutional laws that may negate judicial decisions. The legislative branch has the power to approve or deny the executive appointment of judges, and it has the ability to pass constitutional laws that may negate judicial decisions.

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.

Anna had an auto insurance policy written by Hallbinger Insurance Co. Anna had an accident with Beatrice. Beatrice sued Anna and was awarded $100,000 by a jury and the verdict was entered as a judgment against Anna. Beatrice demanded that Hallbinger pay this judgment. Hallbinger refused and Beatrice sued Hallbinger. Hallbinger moved to dismiss the lawsuit, claiming that Beatrice had no right to sue Hallbinger. Which one of the following correctly states how the court will rule on Hallbinger's motion? Select one: A. The motion will be denied because a third party never has the right to sue a negligent party's insurer. B. The motion will be denied and the suit against Hallbinger will continue if the state allows garnishment actions. C. The motion will be granted, which means that the suit will be dismissed, in any state unless the state has enacted a direct action statute. D. The motion will be granted, which means that the suit will be dismissed, in any jurisdiction because a third party has no right to sue another party's insurer.

B. The motion will be denied and the suit against Hallbinger will continue if the state allows garnishment actions. If an insurer denies claim payments after a judgment, some states allow a third party to sue the insurer directly in a statutory action called garnishment. Some states have direct-action statutes, which permit a negligence victim to sue an insurer directly or to sue both the insurer and wrongdoer (tortfeasor) jointly. (Direct-action statutes, where permitted, allow liability suits to include the tortfeasor's insurer as a defendant. Garnishment actions against a tortfeasor's insurer, where permitted, take place after a judgment against a tortfeasor that the insurer refuses to pay.)

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.

Generally, contract rules apply to contracts for the sale of goods but not in every respect. Which one of the following statements is true regarding contracts for the sale of goods? Select one: A. They do not require consideration to be valid. B. They do not need to state a price to be valid. C. The statute of frauds does not apply to such contracts. D. The defense of undue influence does not apply to such contracts.

B. They do not need to state a price to be valid. They do not need to state a price to be valid. The UCC says that a valid offer must be definitive enough that the parties understand their obligations. Even if one or more terms are left open, an offer can still be valid as long as the parties intended to form a contract and there is a reasonable way to calculate a remedy if the contract is breached. Under the UCC, a written contract doesn't need to detail all the terms, only the term relating to the quantity of goods for sale. Even if the quantity stated is inaccurate, the contract is still enforceable up to the quantity stated.

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.

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 adjudged insane by a court C. Those judged mentally incompetent by a physician D. Those judged temporarily insane

B. Those adjudged insane by a court A person can be adjudged or formally declared insane by a court. A court's adjudication is conclusive.

Cliff has title to a three acre plot of land which is surrounded by a creek. There is a barn with shovels, saddles, and other contents. There is also a well on Cliff's property. The highest property right acquired by Cliff is the

B. Title to the property.

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

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? A. Under the 49 percent rule, Mary would have to pay $7,000. B. Under the 49 percent rule, Mary would have to pay $8,000. C. Under the 50 percent rule, Bob and Mary would have to pay $4,000 each. D. Under the 50 percent rule, Bob and Mary would have to pay $10,000 total.

B. Under the 49 percent rule, Mary would have to pay $8,000. 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).

Defendant

The party in a lawsuit against whom a complaint is filed.

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.

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.

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. Contract B. Valuable C. Cash D. Binding promise

B. Valuable This is a valuable consideration; necessary and sufficient to support a valid contract. Other types of consideration: forbearance, present consideration, future consideration, and binding promise (ex., a promisor's agreement to buy from the promisee all the coal the promisor requires during a specified period).

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

Under the NLRA rules, a union becomes the exclusive bargaining agent by which one of the following? Select one: A. When the union is selected as the appropriate representative by a local labor relations board. B. When the union is selected by a majority of the employees in a unit appropriate for such purposes. C. When the union is selected by a majority of similarly-skilled employees in a particular state. D. When the union is selected as the appropriate representative by the employers.

B. When the union is selected by a majority of the employees in a unit appropriate for such purposes. The National Labor Relations Act provides that a union becomes the exclusive bargaining agent when selected by a majority of the employees in a "unit appropriate for such purposes."

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.

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 be modified to add only the letter written and signed before the date of the final bill of sale. B. Will not include the letter because the letter cannot be admitted into evidence. C. Will become voidable due to the parol evidence rule. D. Includes all documents relating to the sale including the letter Ray wrote prior to the sale.

B. Will not include the letter because the letter cannot be admitted into evidence. Incorrect. 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.

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.

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.

Patty and Bert, who are not married, are tenants in common who own a four-acre plot of land with a log cabin on it. Patty put up capital for the estate while Bert contributed labor and skills. Patty has a son and Bert has a daughter. If Bert, who has no will, predeceases Patty, it is most likely that

Bert's heirs will receive his portion of the estate as tenants in common.

Comparative negligence

Both parties share financial burden based on fault.

What is the executive branch?

Branch led by president/governors with power to recommend, approve, or veto laws.

How can the executive branch influence the insurance industry?

By appointing the insurance commissioner.

How are administrative agencies created?

By statute from the legislative branch.

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.

Principal

The party in an agency relationship that authorizes the agent to act on that party's behalf.

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.

As applied to administrative agencies, appropriate notice under the Due Process Clause of the U.S. Constitution requires which one of the following? Select one: A. A list of the potential consequences of the adjudication, including consequences of ignoring the hearing B. An affirmative statement summarizing the official position of the administrative agency, including all facts and legal theories supporting the position C. A statement of the hearing time, place, and nature, the legal authority and jurisdiction, reference to the statute or rule involved and a short, clear statement of the matters at issue D. The name, office, and background of the hearing's adjudicator

C. A statement of the hearing time, place, and nature, the legal authority and jurisdiction, reference to the statute or rule involved and a short, clear statement of the matters at issue Appropriate notice requires a statement of the hearing time, place, nature, legal authority, jurisdiction, the relevant rule or statute, and a short, clear statement of the matters at issue.

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.

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

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

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

C. An arbitrator's award is filed with the appropriate court and is as enforceable as any court judgment. An arbitration award may be filed with the court and is as valid and enforceable as any court judgment.

Sebastian attacked Aaron and stole his wallet, but a police officer caught Sebastian and arrested him. Aaron sued Sebastian for injuries that he had suffered during the mugging. Sebastian was required to respond to Aaron's complaint by December 10, but Sebastian made a motion before the court, which asked the judge for an extension. In the terms of the classifications of U.S. law, Sebastian's motion would be classified as Select one: A. Criminal and substantive. B. Criminal and procedural. C. Civil and procedural. D. Civil and substantive.

C. Civil and procedural. Sebastian's motion would be classified as civil (not criminal, but rather, provides remedies for breaches of duties) and procedural (rules for steps or processes).

Bailee

The party temporarily possessing the personal property in a bailment.

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. Disclosure of the identity of those who have accessed the patients' health information in the past six years B. The contact information for the hospital's HIPAA staff, privacy officers, and hospital administrators C. An explanation of how to file complaints with the relevant healthcare provider and with the Department of Health and Human Services D. The method by which patients may make special requests for confidential communications

C. An explanation of how to file complaints with the relevant healthcare provider and with the Department of Health and Human Services Incorrect. Notice of privacy practices about how a patient's medical information is used and disclosed must be given to the patient, including the procedure for filing complaints.

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

C. An implied-in-law contract

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

C. An implied-in-law contract. This is typical of an implied-in-law contract and not of an implied-in-fact, unilateral, or executory contract. If a doctor renders professional services to an unconscious person then the law might obligate the patient to pay for those services based on an implied-in-law contract, to avoid unjust enrichment.

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

Upon termination of an agency relationship the principal must take appropriate action to inform third parties that the relationship has terminated to

C. Avoid the operation of apparent authority.

Once an offer is terminated due to a lapse of time, any attempted acceptance Select one: A. Is invalid, and is not binding on the offeror or the offeree, and has no legal effect. B. Becomes a counteroffer, which the original offeror can accept, reject, or unilaterally modify. C. Becomes a counteroffer, which the original offeror can either accept or reject. D. Is valid, as long as it unconditionally and unequivocally accepts the terms of the original offer.

C. Becomes a counteroffer, which the original offeror can either accept or reject. Once an offer is terminated due to a lapse of time, any attempted acceptance becomes a counteroffer, which the original offeror can either accept or reject.

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.

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.

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.

Colson makes knives and swords as a hobby selling his products on a non-advertised basis. He does not package his products but does provide a warranty against defects. If a parent whose child is injured by one of Colson's ever-sharp knives sues Colson under strict liability, which one of the following statements may be true? Select one: A. Colson would be liable because of failure to warn that the knife was sharp and dangerous. B. Knives are generally known to be dangerous instrumentalities and Colson could not be held liable. C. Colson would be strictly liable only if the knife was unreasonably dangerous in normal use. D. Colson is not liable for harm to a third party.

C. Colson would be strictly liable only if the knife was unreasonably dangerous in normal use. Incorrect. In a strict liability lawsuit, Colson would be strictly liable only if the knife was unreasonably dangerous in normal use. Negligence and harm to a third party are not factors. Knives are known to be dangerous therefore only if the knife was unreasonably dangerous when used under normal conditions would strict liability apply.

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

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

During her closing arguments for the defense, attorney Gabriela noticed that several of the jurors were sleeping. Irritated, Gabriela began insulting the jurors and using vulgar language. The jurors woke up and began to argue and throw things at Gabriela, the judge, and other people in the court. The judge was appalled by Gabriela's lack of professionalism and ordered her to pay a fine while he considered how to handle the situation. Gabriela refused to pay the fine. Which one of the following actions would be appropriate for the judge to take? Select one: A. Issue a directed verdict, because the jury was misbehaving during the trial. B. Declare a nonsuit, because Gabriela did not comply with a court order. C. Declare a mistrial, because an extraordinary event has made the jury incapable of delivering an unbiased verdict. D. Issue a special verdict and find against the defense to punish Gabriela.

C. Declare a mistrial, because an extraordinary event has made the jury incapable of delivering an unbiased verdict. A mistrial is a tool a judge can use to take the fact-finding out of the hands of the jury in extreme situations.

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

C. Delivery

Furkan, who was insured with Argot Insurance Company, ran a stop sign and hit Katie, injuring her severely. Katie sued Furkan and Argot Insurance Company jointly. This action is known as Select one: A. Tort action. B. Negligence action. C. Direct action, pursuant to statute. D. Negligence per se action.

C. Direct action, pursuant to statute. A law that permits a negligence victim to sue an insurer directly or to sue both the insurer and wrongdoer, is known as a direct-action statute.

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

Promisor

The party to a contract to whom a promise is made.

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.

Maddy asked her boss for three weeks of leave from work so that she could receive chemotherapy for cancer. Her boss turned down her request, saying that the company was short-staffed already, and he could not afford to honor her request. The employer may be in violation of the

C. Family Medical Leave Act

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.

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.

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

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

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.

In order to protect consumers, the Federal Trade Commission Act attempts to ensure which one of the following? Select one: A. Full disclosure of information about products B. The elimination of intrastate deceptive trade practices C. Free competition in the marketplace D. Uniform standards for product warranties

C. Free competition in the marketplace Incorrect. In order to protect consumers, the Federal Trade Commission (FTC) Act attempts to ensure free competition in the marketplace. The FTC Act is broader than antitrust laws in that it prohibits unfair or deceptive acts that have no relationship to competition.

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.

Linda is an ambulance driver who is trained to administer first aid. While on vacation, she came upon an accident scene. In an attempt to assist, Linda had to move the victim to avoid the flames of an explosion. Her abrupt choices saved the victim's life but now Linda is being sued for injuries to the victim's neck. Which one of the following statements is true regarding Linda's situation? Select one: A. Since Linda chose to assist the victim and was trained in emergency procedures she will not be protected by her state's Good Samaritan laws and will be strictly liable. B. No states protect untrained personnel from assisting a victim but all states have Good Samaritan laws that protect medical personnel such as Linda. C. Generally state laws apply to gratuitous emergency services at the accident scene and they protect a person who provides such services from liability for ordinary negligence. D. Under no circumstances can Linda be held liable for damages as she is protected under federal Good Samaritan laws.

C. Generally state laws apply to gratuitous emergency services at the accident scene and they protect a person who provides such services from liability for ordinary negligence. Generally state laws apply to gratuitous emergency services at the accident scene and they protect a person who provides such services from liability for ordinary negligence. The Good Samaritan laws are state, not federal, laws and the laws vary from state to state.

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

Which one of the following statements correctly describes the effect of an agent's oral promise—made before or during the finalizing of a policy—to waive an insured's future breach of any policy condition? Select one: A. It is effective as a waiver due to the parol evidence rule B. It is effective as a waiver due to the doctrine of election C. It is ineffective due to the parol evidence rule D. It is ineffective because oral statements cannot result in a waiver

C. It is ineffective due to the parol evidence rule The parol evidence rule provides that oral evidence of agreements preceding or accompanying a written insurance policy cannot be used to prove a waiver. Thus, the agent's oral statements made at this time would not be admitted into evidence and thus would be ineffective as a waiver.

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.

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

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

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.

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.

Tammy gave Bert a personal check for purchase of his car. Bert endorsed the check over to Larry in payment of a debt. Before Larry could cash it, Tammy stopped payment because Bert had misrepresented the condition of the vehicle. Neither Tammy nor Larry knew of the misrepresentation until after the check was endorsed over to Larry. Which one of the following describes Larry's rights with regard to this case? Select one: A. Larry must wait until Bert settles with Tammy before he can take legal action. B. Larry can sue Bert for the amount but has no claim against Tammy. C. Larry is entitled to the value of the check from Tammy because Tammy's defenses are not effective against him. D. Larry has no recourse against Tammy because she stopped payment on her check.

C. Larry is entitled to the value of the check from Tammy because Tammy's defenses are not effective against him. Larry is entitled to the value of the check from Tammy because Tammy's defenses are not effective against him as Larry is a holder in due course. In other words, Larry is free of the defenses Tammy has against a claim for payment by Bert.

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.

If a third party's assumptions about an agent's authority are unreasonable and are not supported by facts, the insurer can Select one: A. Reject the agency relationship through the use of the parol evidence rule. B. Terminate the apparent agency relationship through the process of estoppel. C. Legally deny the existence of the agency relationship. D. Disavow the agency relationship through the use of a hold-harmless agreement or a waiver.

C. Legally deny the existence of the agency relationship. Incorrect. The insurer can legally deny the existence of the agency relationship. The insurer's acts alone create the apparent authority and therefore only the insurer can legally deny the existence of an agency relationship.

Jessica operates her architectural business out of her home. She obtains her business and personal insurance through Glaston Insurance Agency (GIA). Daniel, the agent at GIA, neglected to tell Jessica that professional liability coverage was excluded when she purchased the coverage for her business. When the deck on her house collapses, Lily files a suit against Jessica's architectural business. It is soon discovered that Jessica's coverage from GIA does not include professional liability coverage, and that Jessica does not have adequate funds to compensate Lily. Lily decides to file a suit against Daniel. Which one of the following statements is correct regarding Lily's right to sue Daniel? Select one: A. Because the circumstances involve professional liability exposures, most courts will interpret that Lily, as a third party, has the right to sue Daniel. B. Lily, as a third party, has the right to sue Daniel for his failure to transmit information properly. C. Lily was not a party to the Daniel and Jessica's producer-customer relationship, and therefore has no rights under the contract. D. As a third party, the only way that Lily can sue Daniel is by filing a joint suit with Jessica.

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

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

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. Implied warranty of merchantability. B. Negligence. C. Misrepresentation. D. Absolute liability.

C. Misrepresentation. .Incorrect. Misrepresentation. Negligence was not a factor in Patty's lawsuit nor was absolute liability. Implied warranty of merchantability would apply to the function of the windows and not to this situation involving additional cost to Patty. Had Patty known she would be charged for repairs, she would not have originally contracted for the windows. The company is guilty of misrepresentation.

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. May appeal the insurer's decision to the National Association of Insurance Commissioners (NAIC). B. Takes ownership of all policy expirations and retains exclusive rights to policy renewals. C. Must immediately discontinue representation of the insurer. D. Has a minimum of one year to continue representation.

C. Must immediately discontinue representation of the insurer.

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.

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.

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.

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. 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 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. No, a rejected offer is terminated and any attempt to accept the rejected offer is considered a new offer. B. Yes, provided that the offeror did not rely on the offeree's rejection.

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

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 Certain terms are nonessential but are usually covered in a complete contract of sale, such as time of closing and payment terms.

Ordinarily an illegal contract is void, and neither party can sue under the contract. Consequently, the parties to an illegal contract can neither recover damages for breach of contract Select one: A. Nor seek damages for unjust enrichment. B. Nor seek recovery for the completed performance they have made. C. Nor seek recovery for the partial performance they have made. D. Nor seek recovery for any damages

C. Nor seek recovery for the partial performance they have made. The parties to an illegal contract can neither recover damages for the breach of contract nor seek recovery for the value of any partial performance they have made. Although this rule can result in a wrongdoer's unjust enrichment, it deters parties from entering illegal contracts.

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.

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.

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 contractual rights are assignable without the obligor's consent? Select one: A. A right to collect a debt B. Damages for personal injury C. Personal rights and duties D. Contract restrictions

C. Personal rights and duties Ordinarily, any right to collect a debt is assignable because it is usually no more difficult for a debtor to pay the assignee the amount owed than it would have been to pay the original creditor.Damages for personal injury, personal rights and duties, and contract restrictions are not assignable without the obligor's consent.

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 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

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 Incorrect. In general contract law, to be binding a waiver requires consideration. But in insurance law, some waivers are binding without consideration, e.g., waiver of a proof of loss requirement.

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

Justine contracted to create Charlotte's wedding gown by next June. Later, Justine and Charlotte agreed that Tammy would make the gown, and Charlotte expressly released Justine from the original contract. Which one of the following statements is true? Select one: A. There was a discharge by performance. B. There was a personal satisfaction contract. C. There was an agreement to rescind. D. There was substantial performance of a contract.

C. There was an agreement to rescind.

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)

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

C. 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.

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.

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

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.

Filing a financing statement is the most common method of perfecting a security interest. A security interest is perfected when Select one: A. A termination statement is filed and the seller delays selling the goods. B. The security interest is ranked in priority and the attachment of goods does not require filing a financing statement. C. The financing statement has been filed and the security interest has been attached; that is the goods have been sold and the security agreement has been executed. D. The financing statement has been transferred and possession of the collateral moved from the debtor to the secured party.

C. The financing statement has been filed and the security interest has been attached; that is the goods have been sold and the security agreement has been executed.

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.

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 not collect either the principal or the lost interest. B. The lender may collect the principal but is fined for usury action equal to the exorbitant rate of interest previously charged. C. The lender may collect the principal but is barred from collecting the interest. D. The lender may collect the principal and the lowest market interest rate.

C. The lender may collect the principal but is barred from collecting the interest. In most states, a lender who has charged an illegal rate is barred from collecting interest on the loan but can still obtain the principal amount loaned.

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.

Carolina 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 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. D. 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. 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.

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 terms describes an insurer's agent whose authority is established and restricted by express agreement with the insurer? Select one: A. The soliciting agent B. The general agent C. The special agent D. The broker

C. The special agent A special agent's authority is established and restricted by express agreement with an insurer. The agency contract with the insurer creates and expressly restricts the special agent's powers.

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

Which one of the following statements is true regarding contract rights? Select one: A. Assignment of contracts is rare. B. Creditors generally do not have the ability to assign the right to receive money from debtors to third parties. C. Third parties that expect to benefit under another's contract may have enforceable rights under that contract. D. Few contract rights are assignable.

C. Third parties that expect to benefit under another's contract may have enforceable rights under that contract. Today, third parties that benefit from contracts may also have enforceable rights under those contracts. Assignment of contracts is common in a variety of situations. Creditors may assign the right to receive money from debtors to third parties. Most contract rights are assignable.

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.

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.

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 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.

Sarah sent auto mechanic Stan a letter stating she would pay him $500 to repair her car's transmission. Stan knew where Sarah lived and he stopped by her home and began the repairs. Sarah brought Stan a drink of water and left him to his work. In this situation, the contract between Sarah and Stan is Select one: A. Not valid because Stan's acceptance was not unconditional or unequivocal. B. Valid because Sarah is aware of Stan's activities and she does not withdraw her offer. C. Valid since Stan can choose to repair Sarah's car rather than to give a return promise. D. Not valid since Stan never expressed his acceptance of the contract terms orally or in writing.

C. Valid since Stan can choose to repair Sarah's car rather than to give a return promise. There is an offer and Stan's performance of the repair is his acceptance to terms mutually agreed upon. When it is unclear whether a contract is unilateral or bilateral, courts lean toward bilateral. While the usual response to a bilateral contract is a return promise, the offeree can choose to perform the act requested instead. (It could be argued that the contract is unilateral, in which case there is acceptance when repairs began. But Stan could not have been forced to accept/perform the contract if he did not want to.)

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.

Which one of the following statements distinguishes estoppel from waiver? Select one: A. Parol evidence rule applies to estoppel and not waiver. B. Waiver defeats the inequitable intent of the waived party C. Waiver is contractual in nature and rests upon agreement between parties. D. Waiver is equitable in nature and arises from false representation.

C. Waiver is contractual in nature and rests upon agreement between parties. Waiver is contractual in nature and rests upon agreement between parties. Estoppel is equitable in nature and arises from a false representation. Estoppel defeats the inequitable intent of the estopped party. Waiver gives effect to the waiving party's intention. When proving estoppel, parol evidence is admissible (the opposite of the parol evidence rule, which excludes evidence).

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

C. Warranties may be either material or immaterial and are part of the final contract. 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.

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.

In January, Sue verbally agrees to sell one of two her houses to Scott for $250,000 before the end of the year. In November, Scott asks Sue for a written contract and receives a signed handwritten note restating their prior verbal agreement, but it does not say which house is being sold. Is this an enforceable contract? Select one: A. No, because the statute of frauds conditions are not met. B. No, because it is missing critical terms of a real estate transaction. C. Yes, because it reflects the essential elements of a contract. D. Yes, because it conforms to the parol evidence rule.

C. Yes, because it reflects the essential elements of a contract. Incorrect. Yes, this is an enforceable contract because it reflects the essential elements of a contract. Oral evidence is always admissible to help interpret or explain a written agreement, but not to alter its terms. (Even though "parol" means "oral," the parol evidence rule applies to all forms of extrinsic evidence, not just oral evidence.)

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

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

What are the three relevant chapters of the Bankruptcy act?

Chapter 7 : Liquidation Chapter 11 : Large Restructure Chapter 13: Small restructure

Toxic tort

Civil wrong from exposure to a toxic substance.

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.

The stockholders of Company X learned that its directors knowingly and intentionally failed to make a full disclosure in connection with a public stock offering. Three of the corporate shareholders have filed a representative suit on behalf of all of Company X's shareholders to avoid multiple suits regarding the same factual and legal questions about the disclosure of the public offering. This legal action taken by these three shareholders is a

Class action suit.

Incontestable Clause

Clause that states that the insurer cannot contest the policy after it has been in force for a specified period, such as two years, during the insured's lifetime.

John and his three sisters own all of the stock in a small corporation. The company is known only to the family who has agreed to use it strictly for family business and not to trade any of the corporate stock in markets maintained by securities dealers or brokers. Their corporation is therefore a

Closely held corporation.

These contracts must be in writing

Commercial sales greater than $500 Lease agreements Loans and mortgages.

Tom and Mary were involved in an auto accident and Tom sued Mary for causing it. The court decided in Mary's favor because other courts decided the same way in previous cases with similar circumstances. This scenario illustrates the application of which one of the following types of law?

Common law

A product has been making people ill and a number of the victims have filed a class-action lawsuit against its manufacturer. Which one of the following sets of elements would the trial court consider to certify this as a class action suit?

Commonality, numerosity, adequacy of representation, typicality

What do civil law systems have?

Comprehensive codes of written laws (statutes).

What are some forms of collateral

Consumer goods Equipment farm products Inventory Property on paper

Where is the civil law system the foundation of law?

Continental Europe, Latin America, Scotland, Louisiana, and other parts of the world.

Voidable contract

Contract that can be rejected based on certain circumstances.

What are the nine categories of illegal contracts?

Contracts to commit crimes or torts Wagering contracts Contracts harmful to the public interest Usury contracts Contracts with Unlicensed practitioners Contracts to transfer liability for negligence Contracts in restraint of marriage Contracts in restraint of trade Unconscionable bargains

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

Correct. If the agency is "at will" either the principal or the agent has both the power and right to terminate the agency at any time without legal liability.

What is the basis of the common law system?

Court decisions.

Extracontractual damages

Court-awarded payment exceeding usual contract damages.

Consequential damages

Court-awarded payment to indemnify for indirect losses.

Punitive damages (exemplary damages)

Court-awarded payment to punish and deter reckless acts.

Compensatory damages

Court-awarded payment to reimburse for actual harm.

Implied warranty

Court-imposed obligation on seller to warrant certain facts.

Injunction

Court-ordered remedy to act or refrain from acting.

Specific performance

Court-ordered remedy to perform a certain act.

Ratification

Creation of an agency relationship resulting when a principal adopts the act of another who has purported to act for the principal and has neither power nor authority to preform the act for the principal

The U.S. Legal system can be divided into civil and criminal law. What are the main differences between the two?

Criminal law applies to acts society deems harmful to the public welfare that the government is responsible for prosecuting and punishing the perpetrators. Civil law applies to legal matters that are not governed by criminal law, protecting rights and providing remedies for breaches of duties owed to others.

The U.S. legal system can be divided into civil and criminal law. What are the main differences between the two?

Criminal law applies to acts society deems so harmful to public welfare that the government is responsible for prosecuting and punishing the perpetrators. Civil law applies to legal matters that are not governed by criminal law, protecting rights and providing remedies for breaches of duties owed to others.

The Twenty-sixth Amendment to the U.S. Constitution sets the minimum voting age at 18. Assume that, after the amendment was ratified, the U.S. Congress passed a law that prohibited the right to vote for anyone under the age of 21 who had not registered for military conscription. West Virginia likewise passed a law that limited the minimum voting age to 19 for all West Virginia citizens. The U.S. President then issued an Executive Order that forbade any person under the age of 20 with unpaid traffic tickets from voting. The earliest legal voting age for a West Virginia citizen with unpaid traffic tickets who had not registered for military conscription is Select one: A. 19. B. 20. C. 21. D. 18.

D. 18. The earliest legal voting age for a West Virginia citizen with unpaid traffic tickets who had not registered for military conscription is 18. Any law that violates the U.S. Constitution, whether state or federal, is void.

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.

Offeree

The party to a contract who makes a promise or acts in return for something offered by another party.

Doug owned a restaurant in Iowa. It is illegal to conduct any type of gambling activity in Iowa. However, business was slow and Doug replaced his restaurant furniture and fixtures with slot machines and poker tables. Doug enters into several contracts. Which one of the following is an example of a contract with a legal purpose? Select one: A. A contract for property insurance insuring Doug's building entered into after Doug intentionally burned down the building. B. A contract for property insurance insuring Doug's slot machines C. A contract for business income insurance covering any interruption in Doug's new business from a covered peril. D. A contract for life insurance on Doug's life for death by accident.

D. A contract for life insurance on Doug's life for death by accident. A legally binding contract would ordinarily not be valid if the formation or performance is illegal, such as the illegality of gambling at Doug's place of business. Parties to an illegal contract cannot recover damages or value for partial performance.

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

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.

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.

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.

After receiving all pleadings, the defendant asserts that the plaintiff has failed to state a claim for which the court can grant relief. This action is Select one: A. A judgment of pleadings. B. A reply. C. A complaint. D. A motion to dismiss.

D. A motion to dismiss. A motion to dismiss occurs when, after all pleadings, a defendant asserts that the plaintiff has failed to state a claim for which the court can grant relief.

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

Which one of the following is an action causing harm that would most likely result in the application of the res ipsa loquitur doctrine? Select one: A. A drunk driver runs his car into a pedestrian. B. A tornado destroys a barn. C. An arson fire burns a warehouse to the ground. D. A roll of tar paper falls off a building at night and hits someone.

D. A roll of tar paper falls off a building at night and hits someone. Incorrect. A roll of tar paper falls off a building at night and hits someone. Res ipsa loquitur ("the thing speaks for itself") applies when an action or event causing injury is under the defendant's exclusive control and would not likely have happened if the defendant exercised appropriate care.

Tanya leased a building for use as a restaurant. In the process, she purchased and installed a removable pizza oven. At the end of the lease, Tanya's landlord told her the pizza oven was a property alteration because it was attached to real property and must stay with the building. In this situation the pizza oven is Select one: A. An improvement or betterment. B. A property alteration. C. A leasehold interest. D. A trade fixture.

D. A trade fixture. Incorrect. This is a trade fixture since Tanya can remove it. If it was an alteration or improvement or betterment it would become part of the leased structure.

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.

At a jury trial, the judge instructs the jury about applicable laws. This should occur Select one: A. During the swearing-in of the jury. B. Prior to jury selection. C. Prior to the presentation of evidence. D. After closing arguments.

D. After closing arguments. The judge's instruction to the jury about applicable laws should occur after closing arguments.

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.

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.

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.

Which one of the following statements regarding the elements of an offer to contract is true? Select one: A. An offer must state the time of performance to be valid. B. If the subject matter of an agreement is missing from an offer the court will imply it. C. A court will not determine the intent of the parties by implication. D. An offer where the parties to an agreement cannot be identified is invalid.

D. An offer where the parties to an agreement cannot be identified is invalid. Incorrect. An offer where the parties to an agreement cannot be identified is invalid. Inability to identify the parties to, or the subject matter of, an agreement, makes the offer indefinite and therefor impossible to accept.

Which one of the following most accurately describes the ability of an offeror to revoke an offer made to an individual offeree? Select one: A. An offeror can revoke an offer any time before acceptance, but must do so through the same means of communication used in making the original offer. B. An offeror can revoke an offer either by expressly refusing to abide by it or by making a new offer to the offeree. C. An offeror can revoke an offer by any reasonable means, at any time before the offeree completes performance of the contract. D. 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.

D. 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. 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.

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

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

James wants to pursue a legal claim against his neighbor, but he does not know what kind of dispute resolution procedure is the best choice for his situation. The dispute is over a relatively small amount of money, so James does not want to spend a lot in pursuit of his claim. James wants to be able to present his side of the story and his witnesses before a neutral third party. James would be pleased if he and his neighbor could reach a compromise, but, ideally, James wants to be able to walk away with a binding decision. Assuming that James' neighbor will agree to participate in whatever procedure James suggests, which one of the following dispute resolution procedures is the best choice for James? Select one: A. Negotiation B. Mediation C. Litigation D. Arbitration

D. Arbitration Incorrect. Arbitration is the best choice for James. Arbitration involves taking a dispute to an impartial third party for a decision the parties agree will be final and binding. Mediation is using a neutral outside party to assist in obtaining a compromise, and is a nonbinding process. Negotiation is back and forth discussion working toward settlement. Litigation is pursuing a lawsuit.

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

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 filed a complaint with the appropriate state agency before the EEOC. B. Bill should have proceeded with administrative enforcement while the EEOC reviewed his complaint, rather than going to state court. 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.

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

Article 3 of the UCC governs

Negotiable instruments that are payable to a designated payee or bearer Also referred to as an order

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.

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. Can collect the $5,000 from Al since his oral promise is enforceable if collected within 12 months of Vince's death. B. Cannot collect the $5,000 from Al because the debt is not Al's debt. C. Can collect the $5,000 from any of Al's creditors. D. Cannot collect from Al because such a promise must be in writing to be enforceable.

D. Cannot collect from Al because such a promise must be in writing to be enforceable. Incorrect. This is not a binding commitment because Al and Phil did not put their agreement in writing. Phil cannot collect from Al, not because it is not his debt but because the agreement is not in writing as it should be under the statute of frauds.

An insurer's actions during a loss investigation may affect the insurer's rights under the policy. When an insurer knows of grounds for forfeiture or non-coverage and subsequently decides to manage the defense of a lawsuit against its insured, the insurer Select one: A. Has not relinquished its right to stand on policy decisions. B. Can still establish that it is not liable under the policy. C. Must continue to investigate and evaluate the loss on its merits, an activity beneficial to both the insurer's and the insured's interests. D. Cannot refuse coverage on those grounds, unless the insurer gave a timely notice of its reservation of rights.

D. Cannot refuse coverage on those grounds, unless the insurer gave a timely notice of its reservation of rights. Incorrect. When an insurer knows of grounds for forfeiture or non-coverage and subsequently decides to manage the defense of a lawsuit against its insured, the insurer cannot refuse coverage on those grounds, unless the insurer gave a timely notice of its reservation of rights.

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 cannot be punished under the OSH Act because she does not affect interstate commerce. B. Carla could be sued by her employees to recover their medical expenses under the OSH Act. C. Carla loses the right to sue her employees for common-law damages and she could be fined. D. Carla faces civil and criminal penalties.

D. Carla faces civil and criminal penalties.

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.

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

There was a large unmarked sinkhole on Charlotte's property, a short distance from a public road. One evening, a police officer chased a mugger off the road and onto Charlotte's property. Both the officer and the mugger fell into the hole and were injured. Which one of the following best answers whether Charlotte is liable for the injuries to the police officer and/or to the mugger? Select one: A. Charlotte is liable to both the officer and the mugger, because she had a duty to avoid endangering travelers with an unguarded ditch.Incorrect. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger. Firefighters and police officers are licensees when they enter property to perform their duties. B. Charlotte is not liable to either the officer or the mugger, because occupiers of land have no duty to correct defects abutting sidewalks or streets. C. Charlotte is not liable to the officer or the mugger, because they were both trespassers on her property. D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger.

D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger. Firefighters and police officers are licensees when they enter property to perform their duties.

The stockholders of Company X learned that its directors knowingly and intentionally failed to make a full disclosure in connection with a public stock offering. Three of the corporate shareholders have filed a representative suit on behalf of all of Company X's shareholders to avoid multiple suits regarding the same factual and legal questions about the disclosure of the public offering. This legal action taken by these three shareholders is a Select one: A. Derivative action suit. B. Direct action suit. C. Good-faith suit. D. Class action suit.

D. Class action suit. Incorrect. It is a class action suit. Class action- many people damaged, representative files suit on their behalf. Derivative action- one or more stockholders initiate suit on behalf of the corporation for damages incurred by the corporation. Direct action- stockholder files suit to seek remedy for direct harm. Good-faith suit is not a term of art.

Julian was driving his car along a mountain road with his friend Georgia in the passenger seat. Julian's car crashed into a car driven by Magnus. Julian, Georgia, and Magnus were injured. In the subsequent lawsuit brought by Georgia against Julian and Magnus, the court found that Magnus was 100 percent liable for the accident. Next, Magnus sued Julian and pled that Julian was negligently responsible for his injuries. Which one of the following doctrines bars Magnus' claims against Julian? Select one: A. Res judicata B. Special verdict C. Competence rule D. Collateral estoppel

D. Collateral estoppel Incorrect. Res judicata (also known as claim preclusion) bars parties from re-litigating an old claim. Collateral estoppel (also known as issue preclusion) bars parties from re-litigating an old issue.

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.

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. Intention of parties C. Contradictory terms D. Contra proferentum

D. Contra proferentum Incorrect. 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.

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.

Corporations have implied powers to Select one: A. Do anything that corporate management elects to do. B. Do anything that corporate shareholders direct management to do, by shareholder resolution. C. Do only what is specified in the corporate charter. D. Do all things necessary or convenient to achieve the corporation's purpose.

D. Do all things necessary or convenient to achieve the corporation's purpose. Incorrect. In addition to the powers given by law and those stated in the charter, corporations have implied powers to do all things necessary or convenient to achieve the corporation's purpose.

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.

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

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.

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 require Bob to reimburse Dick for the improvements. B. 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. C. Consider the case "inside the statute of frauds" and would hear evidence from both Dick and Bob prior to making a decision. D. Enforce the oral contract in the interest of fairness.

D. Enforce the oral contract in the interest of fairness. Incorrect. 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.

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.

A holder in due course is free of personal defenses. Which one of the following is one of those personal defenses? Select one: A. Incapacity of the drawer B. Duress C. Illegality D. Failure of consideration

D. Failure of consideration A holder in due course is free of personal defenses, such as lack or failure of consideration, misrepresentation, or fraud. But because real defenses go to the very existence of the obligation, a holder in due course can be subject to them. Examples of real defenses are the incapacity of the maker, drawee, or drawer; duress; illegality; and discharge in bankruptcy. So, or instance, the maker's insanity might negate the existence of the obligation in the first place.

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)

Most states permit a corporation's corporate charter to provide that the corporation's stated purpose is to conduct its business operations Select one: A. For the precise purpose stated in the corporate charter. B. For any purpose. C. For only those purposes specified the state's corporation statutes. D. For any lawful purpose.

D. For any lawful purpose. Incorrect. Traditionally, the corporation charter stated the corporation's precise purpose(s). Now, most states permit the stated purpose to be "for any lawful purpose."

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.

Collective bargaining

Negotiating labor contract with union representation.

Buyers and sellers have several options as to where goods will be delivered and which party bears the risk and expense of delivery used in marine insurance. Which one of the following best describes the FOB (free on board) vessel? Select one: A. Ownership passes from the seller to the buyer when the carrier delivers the goods to the buyer's premises. B. The seller is obligated to pay for the insurance and freight charges for the delivery to the buyer. C. The seller delivers goods to the carrier at the seller's risk and expense, and the ownership then shifts to the buyer. D. Goods are loaded on board the vessel at the seller's risk and expense, and then ownership passes to the buyer.

D. Goods are loaded on board the vessel at the seller's risk and expense, and then ownership passes to the buyer. Incorrect. Goods are loaded on board the vessel at the seller's risk and expense, and then ownership passes to the buyer.

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. Figures prevail over words. B. Printing prevails over handwriting. C. Words prevail over printing. D. Handwriting prevails over typewriting.

D. Handwriting prevails over typewriting. Incorrect. When the parties have made typewritten or handwritten changes in a printed contract form, the courts apply the rule that handwriting prevails over typewriting as the first priority. This is a typographical error and therefore handwriting will prevail over typewriting.

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

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.

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

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

D. Implied.

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. Not possible because states cannot preempt the federal OSH Act with their employee health and safety statutes. B. Complete by creating laws that were at least as effective as those developed by the OSH Act. C. Competitive merely by issuing a statement of intent, signed by the governor. D. Incomplete because West Virginia still needs the approval of the Occupational Safety and Health Administration.

D. Incomplete because West Virginia still needs the approval of the Occupational Safety and Health Administration. Incorrect. States may assume exclusive jurisdiction by developing and enforcing job safety programs that are at least as effective as OSHA's, and they need OSHA's permission.

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.

InsurCo executives are concerned about some new legislation so they write to their state's department of insurance for some guidance. The department writes back with some advice about the new law. When an administrative agency clarifies statutes for regulated parties, it is writing which one of the following?

D. Interpretive rule, and it is non-binding.

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.

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.

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.

Administrative agencies often promulgate legislative rules. Which one of the following best describes the primary elements of legislative rules? Select one: A. Legislative rules interpret statutes and provide guidance for agency staff or regulated parties. B. Legislative rules are passed directly by the state or federal congress and are enforced by the agency. C. Legislative rules are advisory notes written by agencies in an attempt to influence legislation. D. Legislative rules come from a statutory delegation of authority and have the same force as a law enacted by a legislature.

D. Legislative rules come from a statutory delegation of authority and have the same force as a law enacted by a legislature. Legislative rules are the primary tools of administrative agencies. The rules have the full force of law, as authorized by statutory delegation from Congress or the state legislature.

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.

Which one of the following best explains why most advertisements are not legally enforceable offers? Select one: A. Most advertisements lack exact descriptions of the items to be bought or sold, the price, or the precise nature of the proposed contract. B. Most advertisements are not direct communications between an offeror and an offeree. C. Most advertisements fail to spell out the conditions of acceptance. D. Most advertisements express no present intent to contract with the viewer of the advertisement.

D. Most advertisements express no present intent to contract with the viewer of the advertisement. Incorrect. Most advertisements express no present intent to contract with the viewer of the advertisement.

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.

Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy was a car loan financed by Lending Bank for $8,000. Which one of the following must Merve do to enforce a new promise to pay this debt and make payments once again on this contract? Select one: A. She must pay additional consideration. B. She must acknowledge the debt. C. She must make no additional promises to pay. D. No additional consideration is required.

D. No additional consideration is required. A new promise to pay a debt barred by bankruptcy is enforceable without any additional consideration.

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.

Betty sold her small bookstore to Kate and orally formed a three year not-to-compete agreement. Two years after the sale, Betty opened a coffee shop with a small bookstore across town from Kate. Kate sued Betty because of the not-to-compete agreement. Their agreement would Select one: A. Be enforceable because Betty's new business includes a book shop which is prohibited under the not-to compete agreement. B. Be enforceable because Betty is competing with Kate prior to the end of the three year not-to-compete contract. C. Not be enforceable because the coffee shop substantially changed the business and the not-to-compete agreement would not apply. D. Not be enforceable because the period exceeds one year.

D. Not be enforceable because the period exceeds one year. Incorrect. This relates to the statutes of frauds one-year requirement and not to the terms of the not-to-compete agreement necessarily. Statutes of frauds usually require written evidence of contracts that cannot be performed within one year from the date of their formation.

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. Enforceable because of Brenda's intent to contract with Jolene. C. Enforceable since Kevin did not deviate from the original terms of the offer. D. Not enforceable because the offeror has the right to choose with whom to contract.

D. Not enforceable because the offeror has the right to choose with whom to contract. Kevin's acceptance on behalf of the estate is not enforceable because the offeror has the right to choose with whom to 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

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. Not liable at common law, not liable under today's law B. Liable at common law, liable under today's law C. 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 Lucy is not liable at common law, but she is liable under today's law. A property owner who leased the property to another was not liable under common law for injuries resulting from the disrepair of the property or from other dangerous conditions, whether the condition resulted in injury to the tenant or to a third person. Today, an owner or landlord is liable when injury results from negligently made repairs or from a concealed danger on the premises that the owner knows about but that the tenant cannot know or easily discover by the use of ordinary care.

The Guilford Corporation was incorporated in Delaware and conducted business in several eastern states. Which one of the following activities of Guilford, if conducted in a state other than Delaware, would most likely constitute interstate commerce in which the state could not properly interfere? Select one: A. Opening up a bank account B. Holding a directors' meeting C. Suing or being sued D. Owning a large warehouse that holds goods for shipments to other states

D. Owning a large warehouse that holds goods for shipments to other states Incorrect. States cannot regulate interstate commerce of foreign corporations. Activities not considered interstate commerce include: (1) opening up a bank account, (2) suing or being sued, and (3) holding a directors meeting. Holding goods for shipment to other states is properly regarded as interstate commerce because business is being conducted across state borders.

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.

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

Ella's Heart Fund relied on donations to support her local heart clinic. Luke pledged $1,500 to the charitable organization. Luke did not honor the pledge. Which one of the following legal doctrines would courts apply if they decide to enforce the pledge? Select one: A. Gift allowances B. Promise to perform an existing obligation C. Bona fide dispute D. Promissory estoppel

D. Promissory estoppel Some courts apply the doctrine of promissory estoppel to charitable subscriptions on the basis that the organization has relied on the pledge to its detriment by undertaking projects the pledge would support and that injustice would result if the promise was not enforced. Promissory estoppel is sometimes described as a substitute for consideration (enforcement of a promise without consideration). In brief, promissory estoppel's elements are: a promise, justifiable reliance on the promise resulting in detriment, and only enforcement of the promise achieves justice.

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.

Cintriell Insurance issued a commercial property insurance policy to Oscar. Cintriell's insurance application asked applicants to rate the condition of their buildings and Oscar stated that his building was in "good" condition. The Cintriell application did not explicitly label the insured's building rating as a warranty and the application did not state that it is considered part of the insurance policy. If a dispute arose, a court would most likely view Oscar's statement about the condition of his building as a Select one: A. Representation, because it required strict compliance. B. Warranty, because an untrue statement would result in an increase in risk. C. Warranty, because it clearly involved a material matter. D. Representation, because it is not clear that the parties intended it to be a warranty and the statement was not incorporated into the policy.

D. Representation, because it is not clear that the parties intended it to be a warranty and the statement was not incorporated into the policy. Incorrect. Courts, whenever possible, have interpreted statements as representations rather than as warranties. 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. These elements were not satisfied here. The parties' intent was not clear and the policy did not state that the application was part of the policy.

Vicente filed a lawsuit against Albrecht Transit for negligence in an accident that caused a head injury. After the judgment rules against Vicente, he wanted to bring another lawsuit against Albrecht Transit for a back injury caused by the same accident. Which one of the following doctrines prevents Vicente from relitigating this case? Select one: A. Issue preclusion B. Collateral estoppel C. Nonsuit D. Res judicata

D. Res judicata The doctrine of res judicata prevents parties to a lawsuit on which a final judgment has been rendered from bringing a second lawsuit on the same claim or in related transactions.

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

Which one of the following types of verdict involves a jury answering specific questions posed by a judge? Select one: A. Directed verdict B. General verdict C. Guided verdict D. Special verdict

D. Special verdict A special verdict is reached by a jury that makes findings of facts by answering specific questions posed by the judge.

Which one of the following is the total amount of capital contributed to a corporation by its shareholders? Select one: A. Capital surplus B. Stock warrants C. Redemption proceeds D. Stated capital

D. Stated capital Incorrect. Stated capital is the total amount of capital contributed by stockholders. Stock warrants are rights to purchase a specified amount of stock. Redemption is the reacquisition of stock by the issuing corporation. Capital surplus is the difference between a stock's purchase price and its par value when stocks sell for more than par value.

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.

A warehouse operator may be liable for damage that stored goods sustain while under the operator's care. Uniform Commercial Code (UCC) Article 7 allows a warehouse operator to limit liability through Select one: A. A statement of ownership in the document of title. B. Purchased insurance coverage. C. Standard terms in UCC gap-filler provisions. D. Terms in the warehouse receipt or storage agreement.

D. Terms in the warehouse receipt or storage agreement. A warehouse operator can be held legally liable for loss to customer property caused by its own negligence. UCC Article 7 allows a warehouse operator to limit liability through terms in the warehouse receipt or storage agreement. For example, the warehouse receipt may specify an amount per article or item or per unit of weight.

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.

Which one of the following is a necessary element for a document to be considered a title under Uniform Commercial Code (UCC) Article 7? Select one: A. The document gives the holder the right to receive, hold, and dispose of both the goods and the document of title itself. B. The document is a contract to ship, store, or dispose of goods. C. The document is negotiable. D. The document is created by the bailee as a receipt for goods received.

D. The document is created by the bailee as a receipt for goods received.

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

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. Advance premium payments on unissued policies. C. Invalid contracts. D. The improper use of binding authority.

D. The improper use of binding authority. Incorrect. The breach of duty also arises in situations involving the improper use of binding authority and not in invalid contracts, gross negligence, or premium payments.

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 the most important factor indicating whether a communication is an offer? Select one: A. The offeree's objective reaction to the offer B. The offeror's subjective intent 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 The language that the offeror uses in the offer is the most important factor indicating whether a communication is an offer. Without specific words of promise, the communication is only a general statement of intention or an invitation to an offer.

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 and the lowest market interest rate. C. The lender may not collect either the principal or the lost interest. D. The lender may collect the principal but is barred from collecting the interest.

D. The lender may collect the principal but is barred from collecting the interest. In most states, a lender who has charged an illegal rate is barred from collecting interest on the loan but can still obtain the principal amount loaned

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.

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. The coverage is cancelled back to the effective date. B. The policy is void. C. Insurer Blithe does not return the accumulated cash value. D. There is a forfeiture of policy rights.

D. There is a forfeiture of policy rights. Incorrect. The policyholder has no duty to pay premiums after payment of the first premium, but nonpayment of premiums can result in a forfeiture of policy rights.

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.

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.

A trade acceptance is a A. Written promise to pay money on demand or at a definite future time. B. Paper containing an unconditional order by the drawer, requiring the drawee to pay a certain sum in money to the payee or bearer. C. Document issued by a financial institution acknowledging receipt of money and promising to repay it, with interest, at a specified time. D. Two-party draft used when a seller wants cash immediately but when the buyer cannot provide it until the goods are resold.

D. Two-party draft used when a seller wants cash immediately but when the buyer cannot provide it until the goods are resold. A trade acceptance is a two-party draft used when a seller wants cash immediately but when the buyer cannot provide it until the goods are resold. The seller (drawer) orders the buyer (drawee) to pay at some future time, with the seller named as the payee. The seller delivers the goods to the buyer and then sells the trade acceptance to another party at a discount to get immediate cash. The buyer resells the goods and then pays the new holder of the trade acceptance.

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.

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?

Damages

Compensatory damages

Damages awarded to compensate for loss or injury.

Punitive damages

Damages awarded to punish the defendant.

During her closing arguments for the defense, attorney Gabriela noticed that several of the jurors were sleeping. Irritated, Gabriela began insulting the jurors and using vulgar language. The jurors woke up and began to argue and throw things at Gabriela, the judge, and other people in the court. The judge was appalled by Gabriela's lack of professionalism and ordered her to pay a fine while he considered how to handle the situation. Gabriela refused to pay the fine. Which one of the following actions would be appropriate for the judge to take?

Declare a mistrial, because an extraordinary event has made the jury incapable of delivering an unbiased verdict. Correct. A mistrial is a tool a judge can use to take the fact-finding out of the hands of the jury in extreme situations.

Assumption of risk

Defense to negligence if plaintiff voluntarily incurred risk.

What are the conditions for legislative delegation of rulemaking power?

Defined scope, exercise within scope, subject to court review.

One reason definite terms are required to make an offer valid is that they make it possible to determine whether the parties have fulfilled their promises. Explain another reason why it's important to include definite terms in an offer.

Definite, or precise, terms also allow damages to be calculated accurately in the event of a breach of contract. Courts can ask whether the offer's terms are clear enough to provide a basis for a remedy if a breach occurs. Let's examine the elements of a valid offer in depth.

What provisions in the constitution apply to insurance?

Delegation of powers to congress Commerce Clause Due Process Clause Equal protection Clause.

Intentional tort

Deliberate act that causes harm or injury.

Quid pro quo sexual harassment

Demanding sexual favors for job benefits.

What happens during the pretrial stage?

Discovery and pretrial conferences occur.

Oscar rented a home to Jayne who got so far behind on rent payments, he told her she was going to be evicted and that she needed to move out. Jayne made no attempts to give up the home, so Oscar seized her possessions and held them for rent. This process is known as a

Distraint

Olivia applied for homeowner insurance with Fredine Insurance. Fredine's application asked about losses in the prior three years and Olivia said she had none. In fact, she had a small theft loss that occurred within the prior three years. Olivia thought the loss happened more than three years before. Fredine issued the policy and two years later, Olivia had a fire loss. Olivia lived in a state with a statute requiring intent to deceive to justify avoiding an insurance policy. If Fredine learns about Olivia's prior theft loss it should

Do nothing—Olivia had no intent to deceive.

For something to be considered a gift there must be

Donative intent Delivery Acceptance

What are the five duties producers own their customers?

Duty to Follow instruction Procure insurance Maintain coverage Place insurance with a solvent insurer advise

What are the four duties a producer owes to the insurer?

Duty to disclose risks follow instructions loyalty and accounting transmit information properly

Mitigation of damages

Duty to minimize additional injury or loss.

Safe Harbor

Easing or elimination of penalties if a good faith effort is made to provide the intended protection of a law or regulation.

What is vicarious liability?

Expanded liability concept for unlawful acts involving multiple parties.

Express warranty

Explicit statement by seller about product's performance.

Negligence

Failure to exercise reasonable care to avoid harm.

Negligent tort

Failure to exercise reasonable care.

Default

Failure to fulfill a legal obligation or loan repayment.

Breach of contract

Failure to fulfill the terms of a contract.

True or false: For a contract to be considered legally enforceable, all that is typically needed is agreement between two parties about what each party promises to do for the other.

False. In addition to agreement, contracts must contain these elements to be legally binding: capacity, mutual assent, consideration, legal purpose, and the form required by law. It's also important to understand the differences between the types of contracts that exist. The next sections will explore these topics.

What is bankruptcy law?

Federal law allowing debtors to divide assets among creditors.

Trade Fixtures

Fixtures and equipment that may be attached to a building during a tenant's occupancy, with the intention that they be removed when the tenant leaves

Newlyweds Faith and Jake purchased a home and they can no longer afford to pay their mortgage payments. They are now faced with foreclosure. Which one of the following statements is true regarding the potential foreclosure?

Foreclosure through public sale is the most likely the means by which Faith's and Jake's interest in the property will be terminated. Correct. Foreclosure through public sale is the most common method of terminating a mortgagor's (borrower's) interest in property.

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?

Franklin's possession was for a brief time period.

Typically, which one of the following categories of insurance producers has the broadest powers?

General agents

b

Grace offered Carla, a lifeguard, a reward of $10,000 to rescue Grace's daughter, Sofia, from drowning at the pool where Carla was on duty. Grace's reward is Choose one answer. A. Consideration because it was a binding promise. B. Not consideration because an act that Carla was legally required to perform cannot be consideration. C. Not consideration because Sofia was a minor and could not be a party to a contract. D. Consideration because it was a valuable consideration offered by Grace.

Freedom of Information Act

Guarantees public access to some governmental information

Maja is purchasing a home and has plans to finance it with Gulford Mortgage Company. At closing Maja and Gulford Mortgage Company have not agreed on who will obtain insurance on the property. If such a provision has not been included on the mortgage which one of the following situations could occur?

Gulford Mortgage Company can obtain separate insurance on Maja's property, solely for the mortgagee's benefit.

c

Hanson is disputing a decision by an insurance company. To resolve the dispute, Hanson and the insurance company each appoint a representative who together choose a third party to review the facts. The decision of any two of the three people (the two representatives and the third party) will be binding on Hanson and the insurance company. What is the name for this type of dispute resolution process? Choose one answer. A. Mediation B. Negotiation C. Arbitration D. Collaboration

Intentional tort

Harm caused by deliberate action.

Good faith

Honesty and absence of fraudulent intent.

d

In a secured transaction, a borrower grants a security interest to a lender to guarantee payment of an obligation. If the borrower defaults on payments, the security interest authorizes the lender to Choose one answer. A. Rescind the debt contract and cancel all future transfers from the lender to the borrower. B. Seek relief in the form of damages under the common law of contracts. C. Accelerate the payments owed under the obligation and require the borrower to pay the entire debt immediately. D. Take the goods that have been designated as collateral or otherwise prevent the borrower from disposing of them.

Confusion

In property law, the intermingling of goods belonging to different owners

Agent

In the agency relationship, the party that is authorized by the principal to act on the principal's behalf.

Publication

In tort law, the communication of a defamatory statement to another person.

To be negotiable (Transferable to another party) an instrument must be

In writing Conform to Article 3 of the UCC (Uniform commercial code)

The judicial branch checks the other two branches of government

Including the power to declare laws.

What power does the executive branch have over administrative agencies?

Influence over rules and regulations issued by agencies.

Ultrahazardous activity (abnormally dangerous activity)

Inherently dangerous activity with strict liability.

d

InsurCo executives are concerned about some new legislation so they write to their state's department of insurance for some guidance. The department writes back with some advice about the new law. When an administrative agency clarifies statutes for regulated parties, it is writing which one of the following? Choose one answer. A. Legislative rule, and it is binding on the regulated parties. B. Legislative rule, and it is non-binding. C. Interpretive rule, and it is binding on the regulated parties. D. Interpretive rule, and it is non-binding.

Bad faith

Insurer's intentional or reckless denial of coverage.

How have you seen arbitration used in the insurance industry?

Insurers will often use arbitration to settle coverage disputes. Auto policies may include provisions that require arbitration of policy disputes. There may also be arbitration agreements that allocate costs of settlements when multiple insurers are involved or to resolve disputes resulting from overlapping coverages.

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?

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

What is fraud?

Intentional misrepresentation causing harm to a person or organization.

Fraudulent misrepresentation

Intentional misrepresentation of facts to deceive another party.

Public nuisance

Interference affecting the public or a substantial segment.

Nuisance

Interference with another's use or enjoyment of property.

Battery

International harmful or offensive physical contact with another person without legal justification.

A secure transaction

Involves data privacy of computer transactions

Which one of the following is an example of an employee?

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

c

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 Choose one answer. A. Promisor. B. Promisee. C. Third-party beneficiary. D. Unintended donee.

At common law, the rule of strict liability generally does not apply to dogs and cats unless the owner

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

Constructive Notice

Knowledge that a person is assumed by law to have because that knowledge could be gained by reasonable observation or inspection.

Real property

Land and anything permanently attached to it.

Environmental law

Law dealing with the environment's protection.

Article 2 of the UCC governs

Laws relating to to the sale of goods, which is defined a s property other than money that is tangible and movable.

Common law

Laws that developed out of court decisions in particular cases and establish precedents for future cases

Where must lawyers file cases?

Lawyers must file cases in courts of general jurisdiction.

Adverse possession

The claim of ownership of land by possession that is exclusive, open, hostile, unpermitted, and continuous for a statutory period.

a

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 ofthe following statements about this conversation is true? Choose one answer. 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.

How should an underwriter understand the legal system?

Learn about the prevailing legal principles that affect our work.

What is negligent entrustment?

Leaving a dangerous article with someone likely to use it recklessly.

Define negligent entrustment.

Leaving dangerous article with someone likely to use it recklessly.

Explain negligent entrustment.

Leaving dangerous item with someone likely to use it unsafely.

Res ipsa loquitur

Legal doctrine where negligence is inferred from the circumstances.

What are motions?

Legal documents filed by the parties in response to the pleadings.

Define vicarious liability.

Legal responsibility for actions of a subordinate or associate.

Define vicarious liability.

Legal responsibility for actions of subordinate or associate.

What is liability?

Legal responsibility for one's actions or debts.

Products liability

Liability for harm caused by defective products.

Strict liability tort

Liability without fault for dangerous activities.

Strict liability (absolute liability)

Liability without fault for extremely dangerous activities or conditions.

Strict liability (absolute liability)

Liability without fault for extremely dangerous activities.

Building codes

Local ordinances or state statutes that regulate the construction of buildings within a municipality, county, or state

d

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? Choose one answer. A. Fraudulent information B. Unlawful mistake C. Detriment D. False representation

d

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? Choose one answer. A. The amount of premium B. The agents' name C. The address ofthe agent's office D. The object or premises if any to be insured

Product liability

Manufacturer/seller's liability for harm caused by a defective product.

c

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 Choose one answer. 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.

Which one of the following can occur when a member of an association has suffered damage to person, property or reputation through the tortuous conduct of another member or of an agent of the association?

Member or agent can be sued individually Correct. A member who has suffered damage to person, property, or reputation through the tortuous conduct or another member or of an agent can sue the other member or agent individually.

d

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 ifl 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? Choose one answer. A. Linnea is legally obligated to pay Mikael $300. B. Linnea is legally obligated to pay Mikael $300 unless she objects within 30 days. C. Linnea has no legal obligation to pay Mikael $300 because silence cannot constitute acceptance. D. Linnea has no legal obligation to pay Mikael $300 because no prior course of dealing supports this.

Uniform Commercial Code (UCC)

Model code for business transactions in the US.

Uniform Commercial Code (UCC)

Model code for consistent business transactions in the US.

Which one of the following is most likely a "disability" under the Americans with Disabilities Act?

Morphine addiction

Personal property

Moveable assets, such as vehicles or furniture.

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?

Mutual trust

b

Neighbors Jack and Jerry were visiting and discussing the cost of new vehicles. Jack told Jerry he wanted to buy a $26,000 car but to do so he would have to sell his current auto for $8,000. Jerry said, "I accept your offer." The contract between Jack and Jerry is Choose one answer. A. Not valid because there were no definite terms established. B. Not valid because a general statement that contains no intent to be immediately bound is not an offer. C. Valid because of Jack's intent to contract for sale of his car. D. Valid because of Jack's intent to sell and Jerry's acceptance of Jack's offer.

Disparate impact

Neutral practice that disproportionately affects protected class.

Do bilateral mistakes about the value of the subject matter make a contract voidable?

No

If a contract between a producer and insurer expressly limits the producer's power to soliciting business, the producer has

No additional actual authority.

Merve filed for bankruptcy a few years ago. One of the debts included in her bankruptcy was a car loan financed by Lending Bank for $8,000. Which one of the following must Merve do to enforce a new promise to pay this debt and make payments once again on this contract?

No additional consideration is required.

Do businesses escape administrative-agency supervision?

No, few businesses do.

As we noted, a contract can be illegal if it contradicts current laws or public policy. But what if a law that renders a contract illegal changes after the contract is first agreed to? Would the contract then become legal?

No. Even if the laws that rendered a contract illegal subsequently change, the contract would remain unenforceable. A new agreement would need to be formed for it to be enforceable.

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?

Nonconforming use

The City of Denbar contracts with Water Company to maintain adequate water pressure in its fire hydrants. Bob's home in Denbar catches fire and cannot be saved due to inadequate water pressure. What rights does Bob have under Denbar's contract with Water Company?

None, because Bob is an incidental beneficiary with no enforceable rights.

Reorganization

Occurs when a corporation becomes bankrupt.

What is the civil law system?

One of the two basic western legal systems.

Grantor

One who conveys property to another

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

Subjective impossibility that does not discharge the obligation.

a

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? A. Damages B. Contract price C. Specific performance D. Injunction

Civil Law

Systems of written law

What is the assumption of control by one corporation over another through merger, acquisition, or some other type of transaction?

Takeover

Repossession

Taking back property due to default on a loan.

d

Tammy gave Bert a personal check for purchase of his car. Bert endorsed the check over to Larry in payment of a debt. Before Larry could cash it, Tammy stopped payment because Bert had misrepresented the condition of the vehicle. Which one of the following describes Larry's rights with regard to this case? Choose one answer. A. Larry cannot cash the check because Tammy stopped payment on it. B. Larry can sue Bert for the amount but has no claim against Tammy. C. Larry must wait until Bert settles with Tammy before he can take legal action. D. Larry is entitled to cash the check because Tammy's claim is not effective against him.

Real Property

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land.

Chattel

Tangible, movable personal property.

Chattel

Tangible, moveable personal property

What areas do agencies regulate?

Taxation, health, labor, etc.

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?

The Patriot Act

According to the United Nations (UN) Charter and the responsibilities of its principal bodies, which one of the following is the UN's primary purpose concerning international business dealings?

The UN's purpose is to identify solutions to international economic problems and cooperate in solving those problems.

Primary Liability

The absolute obligation to pay a negotiable instrument according to its terms

Forbearance

The act of giving up or the promise to give up a legal right

What is forbearance?

The act of giving up or the promise to give up a legal right.

Negligent entrustment

The act of leaving a dangerous article with a person who the lender knows, or should know, is likely to use it in an unreasonably risky manner.

Exclusionary zoning

The act of restricting land use either by prohibiting additional building or by requiring high standards.

Novation

The act of substituting a contract with another contract, an obligation with another obligation, or a party with another party or adding an obligation.

Mutual assent

The act of two or more parties coming together to agree to the terms of a contract.

What is mutual assent?

The agreement of two or more parties to the terms of a contract.

Complaint

The allegations made by a plaintiff in a lawsuit

Defenses to false imprisonment and false arrest for law enforcement officers include which one of the following for felonies?

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

Acceptance

The assent to an offer that occurs when the party to whom an offer has been made either agrees to the proposal or does what has been proposed.

What is acceptance?

The assent to an offer that occurs when the party to whom an offer has been made either agrees to the proposal or does what has been proposed.

Takeover

The assumption of control by one corporation over another through merger, acquisition, or some other type of transaction

Implied authority

The authority implicitly conferred on an agent by custom, usage, or a principal's conduct indicating intention to confer such authority.

Diversity Jurisdiction

The authority of federal district courts to hear cases involving parties from different states that involve amounts in controversy over a legal minimum

Express Authority

The authority that the principal specifically grants to the agent.

Bankruptcy Law

The bond of federal law that allows debtors who are unable to pay their creditors to divide their assets among their creditors to discharge the debts.

Criminal Law

The branch of the law that imposes penalties for wrongs against society.

Grantee

The buyer or real property after execution of the deed.

Usury

The charging of an illegally high rate of interest on a loan.

What is usury?

The charging of an illegally high rate of interest on a loan.

Joe negotiated a price of $130,000 for one of Simon's five homes he was selling. They agreed on the specific home but in the contract of sale, the description was a reference to Simon's "property for $130,000." At closing Joe refused to pay Simon indicating that he was selling him the wrong piece of property. Which one of the following is a missing element in this contract of sale?

The contract of sale did not contain the essential terms.

Exclusive Control

The control of only one person or entity in tort law is the control by the defendant alone of an instrument that caused harm.

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?

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

Which one of the following provides a stockholder with grounds to file a lawsuit to dissolve a corporation?

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

Fiduciary duty

The duty to act in the best interests of another.

Who can appoint the heads of administrative agencies?

The executive (president, governor, or mayor).

What is negligence?

The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others.

What is breach of contract?

The failure, without legal excuse, to fulfill a contractual promise.

Malicious prosecution

The improper institution of legal proceedings against another.

Undue Influence

The improper use of power or trust to deprive a person of free will and substitute another's objective, resulting in a lack of genuine assent to a contract.

What is undue influence?

The improper use of power or trust to manipulate someone into a contract.

Assignee

The individual or entity to whom property, rights, or interests have been transferred.

What is a complaint?

The initial pleading filed by the plaintiff in a lawsuit.

Malice

The intent to do a wrongful act without justification or excuse.

Waiver

The intentional relinquishment of a known right.

Merger

The joining together of two or more corporations to become a new organization

Conversion

The lawful exercise of control over another person's personal property to the detriment of the owner.

What is rescission?

The legal act of canceling and voiding a contract.

Contract status

The legal enforceability and binding nature of an agreement.

Intellectual Property rights

The legal entitlement attached to the expressed form of an idea or of other intangible subject matter

Title

The legal ownership of property; the highest right to property that a person can acquire

Respondent superior

The legal principal under which an employer is vicariously liable for the torts of an employee acting within the course and scope of employment.

Copyright

The legal right grated by a government entity to a person or an organization for a period of years to exclusively own and control an original written document, piece of music, computer cod, or other form of expression.

Strict Liability

The liability imposed by a court or by a statute is in the absence of fault when harm results from activities or conditions that are extremely dangerous unnatural, ultrahazardous extraordinary, abnormal, or inappropriate.

Appellant

The losing party in a court case who appeals the case to an appellate court.

Loss of Consortium

The loss by one spouse of the other spouse's companionship, services, or affection

Bona fide occupational qualification (BFOQ)

The minimum qualification, under federal antidiscrimination laws, that an employee needs in order to be able to perform the duties of a particular job

Secondary liability

The obligation to pay a negotiable instrument only if someone else refuses to pay or to accept the instrument.

Express license

The oral or written permission to enter onto another's land to do a certain act, but not the granting of any interest in the land itself.

Priority

The order in which claims are paid in bankruptcy.

Bailor

The owner of the personal property in a bailment

Election

The voluntary act of choosing between two alternative rights or privileges.

Gift

The voluntary and gratuitous transfer of property without consideration

Appellee

The winning party in the original lawsuit.

Yusuf works as a claim representative for an insurer. During his annual performance review, his claim manager told him, "You can't get ahead around here by working 9 to 5 and limiting yourself to so many files per month. If you want to get promoted, you should take on extra work and put in extra hours. That will get noticed." During the following year, Yusuf did as the claim manager recommended. He increased his hours and handled more files. Yet, when a promotion became available, another claim representative received the position. Yusuf felt cheated and filed suit against his employer under the theory of promissory estoppel. What argument should the employer make in its defense?

There was no promise for promotion, just opinion.

How are agency rules made known?

Through formal public announcements.

Statute of limitations

Time limit for filing a lawsuit.

Statute of limitations

Time limit to file a lawsuit.

What qualifies as appropriate notice?

Time, place, nature, legal authority involved, Jurisdiction, statute or rule, and matter at issue.

What is the role of the executive in administering laws?

To carry out laws through administrative agencies.

What is the purpose of a pretrial conference?

To encourage settlements and discuss the case with the judge.

What is the role of administrative agencies?

To implement and enforce the law.

What is the purpose of a summons?

To notify the defendant of the lawsuit and provide a copy of the complaint.

Jemma bought a parrot from Donna and Gilda promised Donna that if Jemma did not pay for the parrot she would pay for it. Gilda's promise should be in writing

To protect Gilda from fraud by an assertion that she had an obligation to pay for the parrot

a

Tobias ordered fifty end tables for his furniture company from Keithly's Custom Tables. The tables were manufactured by Keithly's for Tobias on credit. Keithly's then discovered that Tobias was insolvent. Which one of the following describes Keighly's options for this breach of contract? Choose one answer. A. Keithly can stop the manufacture of the tables and sell the tables as they are or for scrap. B. Keithly can stop the manufacture ofthe tables and wrote off the loss of materials and labor. C. Keithly can complete the manufacture and sell to Tobias when his credit is cleared. D. Keithly can complete the manufacture and enter into a cash-only contract with Tobias.

c

Tommy agreed to mow Heidi's lawn on Wednesday for $35. Tommy then remembered that he had a baseball game on Wednesday. He asked Heidi if it would be okay for his friend, Jeremy, to mow her lawn, and Heidi could just pay the $35 directly to Jeremy. Heidi expressly released Tommy from his obligation. This agreement is known as Choose one answer. A. Substantial performance. B. Contract reformation. C. A novation. D. An accord and satisfaction.

Concurrent Causation

Two or more defendants who are liable, one covered, one not covered. A legal doctrine stating that if a loss can be attributed to two or more independent concurrent causes - one or more excluded by the policy and one covered - then the policy covers the loss.

Joint Tortfeasors

Two or more parties who act together to commit a tort or who commit separate torts that combine to cause an injury or loss.

What are the necessary terms in insurance contracts

Type of Coverage Object to be insured Amount of Insurance Insured's name Duration of coverage

Trespass

Unauthorized entry to another person's real property or forcible interference with another person's personal property.

a

Under the Model State Administrative Procedure Act, what are the two basic steps that agencies must complete before publishing a new regulation? Choose one answer. A. Agencies must first publish a notice of intent to adopt a regulation and then provide opportunity for public comment. B. Agencies must first publish the proposed regulation in relevant local media and then wait one month. C. Agencies must first seek expert advice on crafting an effective regulation and then must submit the proposed regulation to the legislature. D. Agencies must first seek public comment on the proposed regulation through opinion polling and other means and then must provide opportunity for the pubic to amend the regulation.

Anticipatory breach

Unequivocal indication of non-performance before due date.

What is the requirement for valid business regulations?

Uniform application to all members within the same business class.

Personally identifiable information (PII)

Unique identifying information requiring safeguarding.

Personally Identifiable information

Unique identifying information, such as name, address, or social security number used separately in conjunction with other information that requires safeguarding and confidentially.

Conversion

Unlawful control over another's personal property.

Private nuisance

Unreasonable interference with another's property.

Unfair competition

Use of wrongful or fraudulent practices by a business to gain an unfair advantage over competitors

Material breach of contract

Violation justifying termination by nonbreaching party.

Material breach of contract

Violation of the agreement that would justify a non-breaching party's termination of the contract

Agencies can only investigate....

What is necessary to the investigation.

c

What is the major power of legislative bodies in the United States? Choose one answer. A. The power to review court decisions B. The power to declare laws unconstitutional C. The power to enact laws D. The power to appoint judges

Under the NLRA rules, a union becomes the exclusive bargaining agent by which one of the following?

When the union is selected by a majority of the employees in a unit appropriate for such purposes

a

Which one of the following best classifies felonies and misdemeanors? Choose one answer. A. Felonies are major crimes and misdemeanors are minor crimes. B. Felonies are crimes and misdemeanors are civil harms. C. Felonies are federal crimes and misdemeanors are municipal crimes. D. Felonies are crimes related to physical injury and misdemeanors are crimes related to property.

d

Which one of the following best describes equity courts in the United States federal judicial system? Choose one answer. A. An obsolete court system from England that used "fairness" to decide cases, rather than court decisions or statutes B. A court system, separated from the federal system of law, which decides issues left unaddressed by Congress C. A special panel of jurors that can hand down unique remedies for uncommon cases D. A court that can offer solutions beyond traditional legal remedies, at the sole discretion of a judge

b

Which one of the following best describes the role of constitutions in the United States? Choose one answer. A. Constitutions contain all statutes that have been enacted by the legislature. B. Constitutions specify the government's powers and the limitations on those powers. C. Constitutions define individual rights and leave the structure of the government to the judicial branch. D. Constitutions explain what law prevails when there is a conflict among the states.

c

Which one of the following contractual rights is not assignable? Choose one answer. A. Trade usage B. Specific performance C. Personal contracts D. Punitive damages

c

Which one of the following correctly notes a difference between nonwaiver agreements and reservation of rights letters? Choose one answer. A. Only nonwaiver agreements prevent insured's subsequent claims for waiver. B. Only reservation of rights letters allow the insurer to retain the right to deny coverage later. C. The reservation of rights letter provides unilateral notice to the insured. D. Reservation of rights letters are generally not enforced by the courts.

d

Which one of the following describes the holder in due course? Choose one answer. A. The person purchasing the negotiable instrument at a judicial sale or taking it under legal process B. The person acquiring the negotiable instrument in taking over an estate C. The person purchasing the negotiable instrument as part of a bulk transaction not in the regular course of the transferor's business D. The person possessing a negotiable instrument that has been issued for value in good faith without notice that it may not be valid

b

Which one of the following is a necessary element for a document to be considered a title under Uniform Commercial Code (UCC) Article 7? Choose one answer. A. The document is negotiable. B. The document is created by the bailee as a receipt for goods received. C. The document is a contract to ship, store, or dispose of goods. D. The document gives the holder the right to receive, hold, and dispose of both the goods and the document of title itself.

a

Which one of the following is a role of a U.S. President? Choose one answer. A. Appoint federal judges and the heads of administrative agencies, who can influence court decisions and regulations for years B. Veto laws, because the president can permanently stop any unwanted legislation C. Direct congressional decisions D. Appoint the heads of administrative agencies for all states

c

Which one of the following is a way for a creditor to perfect a security interest? Choose one answer. A. Obtain an attachment from the debtor B. File a financing statement with competing third parties C. Obtain possession of the collateral D. Dispose of the collateral after the debtor fails to make a payment

d

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? Choose one answer. A. Deny the insured's claim B. Pay the insured's claim C. Inform the insured that the insured has breached the policy's cooperation clause D. Send a reservation of rights letter to the insured

a

Which one of the following statements about state unfair trade practices acts is true? Choose one answer. A. Unlike the Federal Trade Commission Act, many of the state unfair trade practices acts apply to insurance. B. Most state unfair trade practices acts remove consumer rights to sue businesses that the Federal Trade Commission Act provides. C. Very few state unfair trade practices acts follow the National Association of Insurance Commissioners' model Insurance Fair Trade Practices Act. D. State unfair trade practices acts only regulate insurance practices that involve boycott, coercion, or intimidation.

c

Which one of the following statements correctly expresses a distinction between waiver and estoppel? Choose one answer. A. The parol evidence rule applies to estoppel, but not to waiver. B. Estoppel requires resulting injury or reliance by the party asserting it. C. Estoppel is contractual in nature, but waiver is equitable in nature. D. Only waiver prevents an insurer from reviving a defense it has forfeited earlier.

Two of the reasons contracts can be voided—fraud and innocent misrepresentation—are very similar but have one important distinction between them. Can you identify that distinction?

While both fraud and innocent misrepresentation can result in a contract being voided, innocent misrepresentation will not result in monetary damages being awarded. Fraud, because it is intentional, can result in damages being awarded.

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

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

Which one of the following is the name of the suit that an employee can bring against an employer for illegal termination?

Wrongful discharge

Can parties file a complaint without a lawyer in small claims courts?

Yes, in small claims courts parties can usually file a complaint without a lawyer's assistance.

Did you know that some provisions in the U.S. and individual state constitutions determine the rights and responsibilities of individuals, insurers, and government actors in regard to insurance?

You may be familiar with the part of the Fifth Amendment known as the Due Process Clause, which prohibits arbitrary taking of life, liberty, or property by the government. Many state constitutions also have a due process clause. So, for example, if a state insurance department compels an insurer to reduce rates without a hearing, the insurer may appeal that it didn't get an opportunity to protect its interests. Other parts of the constitution that apply to insurance include the delegation of powers to Congress, the Commerce Clause, and the Equal Protection Clause.

Insurance Agent

a legal representative of one or more insurers for which the representative has a contractual agreement to sell insurance

Bond

a long-term debt instrument that requires the issuer to pay a set annual rate of interest and to repay the borrowed sum on a specified date.

Statutue

a written law passed by a legislative body at either the federal or state level

Security Interest

an interest in property that allows the property to be sold on default to satisfy the debt for which the security interest was given

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.

McCarran-Ferguson Act

gives regulatory authority back to the states reversing SEUA

Negotiation

parties attempt to settle the dispute informally, with or without attorneys

Arbitration

settling a dispute by agreeing to accept the decision of an impartial outsider