Contract law

Contract of indemnity (indemnify)

Financially "whole"; not allowing gain; avoid overpayment reimbursed

Concealment

Intentional failure to disclose

Fraud

Knowing misrepresentation or concealment

Misrepresentations

Lie

Representations

Material facts; insurer's

Legal purpose

Not against the public (meth lab)

Unilateral contract

One party; duty to perform; enforceable by the insured

Contract of utmost good faith

Rely upon the representations of the other; trust each other

Consideration (value of trade)

Something of value

Warranties

Written statements; insured guarantees

All of the following are requirements of a legally binding contract, except: a. an exchange of equal consideration b. an offer and acceptance c. competent parties d. legal purpose

a. an exchange of equal consideration

When one party constructs the contract and the other party has no input, it is known as: a. contract of adhesion b. aleatory contract c. unilateral contract d. conditional contract

a. contract of adhesion

an insurance contract is a legally binding contract. which of the following best describes the insured must accept or reject all of the policy provisions? a. contract of adhesion b. unilateral contract c. contract of indemnity d. conditional contract

a. contract of adhesion

a banana peel on the floor of a grocery store on which a person could slip and fall is a: a. hazard b. peril c. cause of loss d. pure risk

a. hazard

which of the following would be a moral hazard? a. wet pavement on the highway b. arson c. leaving building unlocked d. a banana peel on the floor

b. arson

all of the following are requirements for a contract to be legally binding, except? a. both parties must give something of value b. both parties must sign the contract c. both parties must, at the time of the contract, be considered legally competent d. both parties must come to an agreement which requires both an offer and acceptance

b. both parties must sign a contract

statements made by the applicant on an insurance application are considered: a. warranties b. representations c. guarantees d. misrepresentations

b. representations

which statement made by the insured automatically voids the insurance coverage if not true? a. fraud b. warranty c. representation d. misrepresentation

b. warranty

An insurance contract is all of the following, except? a. contract of utmost good faith b. aleatory contract c. bilateral contract d. contract of adhesion

c. bilateral contract

an insurance contract is a legally binding contract. which of the following best describes a policy concept which allows the insured to be reimbursed without making a gain? a. conditional contract b. unilateral contract c. conditional contract d. contract of indemnity

d. contract of indemnity

all of the following statements are true regarding an insurance contract, except? a. consideration is something of value which is required of both parties b. the insured must adhere to the terms of the contract without negotiation c. insurance contracts are enforceable by the insured d. insurance contracts are bilateral contracts

d. insurance contracts are bilateral contracts

Which of the following would be considered competent to enter a contract? a. retired person committed to a mental hospital b. a girl scout, age 12, selling girl scout cookies c. individual having a difficult time walking after leaving a tavern d. person confined to hospital due to a heart attack

d. person confined to hospital due to a heart attack

all of the following are characteristics of an insurance contract, except? a. the insured must give consideration b. the insurer must give consideration c. the contract is enforceable by the insured d. the contract is enforceable by the insurer

d. the contract is enforceable by the insurer

Penalties of fraud (felony) *Court of law

1. Civil penalty of up to $10,000 2. Imprisonment for up to ten years 3. Combination of both

Contract of adhesion

Ambiguity (unclear); in favor of the insured; take it or leave it

Competent parties

At the time of agreement

Agreement

Both an offer and an acceptance

An insurer must rely on the truthfulness and integrity of the applicant. This is called: a. Conditional contract b. bilateral contract c. bilateral of utmost good faith d. unilateral contract

C. contract of utmost good faith

Conditional contract

Certain conditions (rules) are required of both parties