CPCU 530

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

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.)

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

Assuming that all of the following parties have a security interest in the same negotiable instrument, which one of the following parties' rights is superior to all the others?

A holder in due course (A holder in due course rights is superior to all the others. A holder in due course takes a negotiable instrument free of any perfected security interest in that instrument.)

Which one of the following most accurately describes the role of the mediator in alternative dispute resolution?

A mediator is a neutral third party who acts as a catalyst to help parties analyze their dispute, consider possible solutions, and devise a compromise formula. (A mediator is a neutral third party who acts as a catalyst to help parties analyze their dispute, consider possible solutions, and devise a compromise formula.)

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. (A minor must fulfill his or her obligation under a contract for necessaries. A minor who is misrepresenting age can generally avoid a contract, but the other party can, too. A minor avoiding a contract must make restitution in most states. A parent is not liable for a minor's contracts, with some exceptions)

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?

A third party failed to perform the contract. (One of the personal defenses an agent can set up is that the third party failed to perform the contract. Other defenses: the principal or agent performed the contract, and the statute of frauds or statute of limitations precludes recovery.)

The Merve's recently had their house covered with vinyl siding. As a means of obtaining property, this is an example of

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.)

Authority that an insurer intentionally allows an agent to believe he or she possesses is

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.)

Which one of the following governs liability of a partnership and of the individual partners for torts committed by one of the partners?

Agency (The laws of agency govern liability of a partnership and of the individual partners for torts committed by one of the partners. The acting partner is ultimately liable. If the partnership or any other partner is forced to respond in damages to the third party, the acting partner must theoretically reimburse the other partner or the partnership. In reality, insurance usually covers the liability.)

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

Agency by appointment. (Power of attorney is an example of agency by appointment which gives an agent the power to sign personal documents on the principal's behalf.)

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

An executory contract. (The type of contract that has not been completely performed by one or both of the parties is an executory contract. An executed contract is one that has been completely performed by both parties.)

Charlie 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

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 most accurately describes the ability of an offeror to revoke an offer made to an individual offeree?

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.)

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

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.)

The specialized categories of sales contracts include the sale on approval, sale or return, and

Auction sales. (Sales contracts usually involve the exchange of specified goods at a specified price to be delivered at or within a specified time. There are, however, specialized categories of sales contracts: the sale on approval, sale or return, and auction sales.)

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?

Ayoub may have a valid claim against MC if his state allows a covenant-of-good-faith exception to the at-will doctrine. (Ayoub may have a valid claim against MC if his state allows a covenant-of-good-faith exception to the at-will doctrine. Some courts have recognized the covenant-of-good-faith exception, also called the implied-in-law contract exception, to mean that an obligation exists because of the conduct of the parties or some special relationship between them.)

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. (Since Bert died having no will, and has at least one heir, that heir, his daughter will inherit Bert's real property as a tenant in common. The law does not require equal distribution and the parties can own unequal shares. There are no rights of survivorship for tenants in common.)

Emil is a sole proprietor of a business that sells auto parts. He decides to incorporate his business. After incorporation, however, he treats his business like it is still a sole proprietorship and comingles his personal funds with those of the corporation. If Emil's business incurs debts that it cannot pay, which one of the following describes Emil's liability for these debts?

Both Emil and the corporation are liable for the debts (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.)

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

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.)

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

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

As owner of a large apartment building, Mel has rented all units. In fact, for the past eight years Alex, who has no means of earning and income, has stayed in one of the units. Mel pays utilities on the unit and is well aware of Alex using the unit but until recently Mel has had no reason to evict Alex from the apartment. Alex may attempt to stay in the unit by

Claiming adverse possession, although he may not be successful. (Alex may attempt to stay in Mel's apartment by claiming adverse selection, although he may have trouble proving that the possession was adverse or hostile given Mel's tolerance of his occupancy. OCEANS is a popular mnemonic to remember, roughly, the elements of adverse possession: Open (and obvious), Continuous, Exclusive, Adverse (and hostile), Nonpermissive, and Statute of limitations.)

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?

Colson would be strictly liable only if the knife was unreasonably dangerous in normal use. (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.)

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?

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.)

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

Consider regulations in all of the states it conducts business. (With regard to data privacy laws, Durham Investments' risk management team should consider regulations in all of the states it conducts business. To close data protection gaps in areas not addressed at the federal level, states have enacted data and cybersecurity laws that, in many cases, cover a more expansive range of industries and sectors than federal laws.)

Kate plans to give her son a gift of $5,000 for college tuition. Which one of the following elements must such a gift possess?

Constructive or physical delivery of the gift (This must be done by constructive or physical delivery of the gift. The three elements of a gift are donative intent, delivery, and acceptance. Delivery can be by physical transfer, constructive, or implied by law [usually in estate law].)

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

Contract of adhesion. (Contract of adhesion. The insurer determines the exact wording of the policy and the insured must "adhere" to the contract drafted by the insurer.)

Contracts subject to the statute of frauds include

Contracts for the sale of an interest in land and contracts for the sale of personal property for at least $500. (Contracts for the sale of an interest in land and contracts for the sale of personal property for at least $500, plus agreements that cannot be performed within one year, agreements to pay a debt owed by another person, and agreements in which an executor of an estate promises to pay estate debts from personal funds.)

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 (Damages, as a remedy, are available if a seller appropriately resells the goods and receives less than the contract price. The difference between the contract price of $2,000 and the price on resale of $1,500 (which is $500) is the damages. These were compensatory damages which would be used to indemnify Susie for the actual harm cause by the breach of contract by Marcus.)

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?

De facto merger (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.)

Which one of the following is a lawsuit that may be filed by one or more stockholders on behalf of the corporation to address the action of a corporate officer or director who has diverted corporate assets for personal use or otherwise mismanaged the corporation?

Derivative action (Under certain circumstances, one or more stockholders may sue on the corporation's behalf in a derivative action. Class actions are brought on behalf of a group of individuals, but are brought on their behalf—not on behalf of the corporation. Direct actions are filed by individuals—not groups. There is no type of lawsuit called a "stockholder's action.")

A producer who fails to add an available coverage requested by an insured has failed in which one of the following producer duties?

Duty to follow instructions (The producer has failed in its duty to follow instructions. A producer must strictly follow the customer's instructions and is liable to the customer for any damages that result from not doing so.)

Which one of the following is true regarding unincorporated associations?

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

Which one of the following legal doctrines would most effectively provide a defense against a party who asserts a legal remedy when that party had previously chosen another, inconsistent, legal remedy?

Election (Election is the voluntary act of choosing between two alternative rights or privileges. The choice of one, for example a legal remedy, can imply relinquishment of the one not chosen—especially if they are inconsistent.)

Which one of the following is a legal principle that prohibits a party from asserting a claim or right that is inconsistent with that party's past statement or conduct on which another party has detrimentally relied?

Estoppel (This statement correctly describes estoppel. Waiver is the voluntary relinquishment of a known right. Election is the voluntary act of choosing between two alternative rights or privileges. Warranty is a written or oral statement in a contract that certain facts are true.)

Which one of the following statements correctly expresses a distinction between waiver and estoppel?

Estoppel requires resulting injury or detriment by the party asserting it. (Detrimental reliance is an element of estoppel and must be demonstrated by the party relying on it. The parol evidence rule applies to waiver but not to estoppel. Waiver is contractual in nature and estoppel is equitable in nature. Waiver, estoppel, and election each prevent an insurer from reviving a defense it has forfeited earlier.)

Which one of the following statements is true regarding Executive Order 11246 and employers with government contracts?

Executive Order 11246 mandates affirmative action plans for federal contractors and subcontractors. (Executive Order 11246 is the source for federally mandated affirmative action plans, which are written plans for meeting hiring goals for groups the law protects from discrimination.)

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

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.)

Which one of the following is the primary way that formal mediation differs from a pretrial settlement conference?

Formal mediation requires the parties to submit their dispute to an agreed-upon outside mediator, but the parties do not necessarily select who will conduct a pretrial settlement conference. (Incorrect. Though mediators, formal and informal, are often judges, formal mediation involves seeking the assistance of a neutral intermediary to assist the resolution of the dispute.)

Which one of the following is an example of just cause in agency termination?

Fraud (Examples of just cause are fraud, criminal activity, and flagrant violations of agency contracts.)

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?

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. For ex., Sophie, an agent, agrees in a contract to purchase from Riko "all of the rubber that Sophie requires." Riko is unaware that Sophie represents Victor, whose rubber requirements are substantially greater than Riko knows or is able to meet. Under the circumstances, Victor cannot enforce the contract against Riko.)

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?

Hanna cannot enforce the contract against Samuel because Hanna is an undisclosed principal and the enforcement would impose a substantially greater burden on Samuel. (Hanna cannot enforce the contract against Samuel because Hanna is an undisclosed principal and the enforcement would impose a substantially greater burden on Samuel. An undisclosed principal cannot enforce a contract against a third party if enforcement would impose a substantial burden on the third party.)

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?

I accept. I will buy the collars on or before Saturday with the color of the collars to be worked out. (Acceptance must be unconditional and unequivocal; meaning that the acceptance follows the terms of the offer and the provisions regarding time, place, or manner of acceptance. When it's unclear, as it arguably is here, whether the parties intended a unilateral or bilateral contract, courts usually rule in favor of bilateral. With bilateral, acceptance is complete when the offeror provides the requested return promise.)

For absolute liability crimes, corporations can be found guilty of a crime without specific intent

If the responsible employee was acting within the scope of employment to benefit the corporation. (. Under criminal law, corporations can sometimes be guilty of a crime without specific intent. For these absolute liability crimes, specific intent is irrelevant. The test of corporate criminal responsibility is whether the responsible employee was acting within the scope of employment to benefit the corporation.)

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?

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 duty the principal owes an agent?

Indemnity for losses (The principal owes a duty of indemnity or reimbursement for any losses or damages the agent has suffered arising because of agency and incurred through no fault of the agent.)

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

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.)

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?

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. (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.)

Allison sued George for breach of contract and the term "contractual consideration" was at issue. In court, the term would be given its

Legal meaning. (Legal terms are given their legal meaning under plain meaning rules of contract interpretation. A fundamental standard of contract interpretation is that words are to be understood in their plain and usual meaning.)

Nicolas wanted to ship 1,000 bottles of cream soda to a store in Denver, owned by Luke. Nicolas's carrier issued a straight bill of lading. Before the goods were delivered, Luke found a different store in Chicago that offered him a higher price for the cream soda. Which one of the following correctly states whether Luke can instruct Nicolas's carrier to deliver the goods to the store in Chicago?

Luke cannot instruct the carrier to deliver the goods to the store in Chicago, because a straight bill of lading is nonnegotiable. (Luke cannot instruct the carrier to deliver the goods to the store in Chicago, because a straight bill of lading is nonnegotiable.)

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?

Merve need provide no additional consideration. (A new promise to pay a debt barred by bankruptcy is enforceable without any additional consideration. The promise must clearly express the promise to pay, and some states require renewal promises to be in writing.)

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

Morphine addiction (The ADA defines disability as "a physical or mental impairment that substantially limits one or more of the major life activities of such individual," including infectious diseases, mental illness, and many addictions.)

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?

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

Which one of the following best explains why most advertisements are not legally enforceable offers?

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

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?

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?

Nonconforming use (Nonconforming use is the basis for which Cheryl is entitled to relief from the new zoning law. A nonconforming use is a land use that is impermissible under current zoning restrictions but that is allowed because the use was lawful before the restrictions took effect.)

Milton, a builder, has just completed a home for Juhani. Milton was responsible for the final inspection of the home to make sure the stairway was safe and the electrical and plumbing were safe also. Milton asked William, the carpenter, to do the final inspection. Shortly thereafter, the house caught on fire due to faulty wiring. Which one of the following is the applicable exception to the rule that an employer is not liable for the independent contractor's torts?

Nondelegable duty (The employer can be liable if the employer delegated a nondelegable duty to an independent contractor.)

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?

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. Repudiation is a party's refusal to meet obligations under a contract. Substantial performance is the performance of the primary, necessary terms of an agreement. A tender is an offer to perform one's duties under a contract.)

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

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.)

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

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.)

In a class action lawsuit involving an insurer's claim practices, the court must consider the elements of

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?

One (Adam has one common law cause of action against William, refusing lodging.)

Gabby found a laptop computer on a park bench and took it home. The computer had various problems with it, and Gabby fixed most of them. Eventually, she noticed flyers posted around town that described the computer in her possession and gave the address of the original owner, Lars. Gabby found Lars who offered to pay a $50 reward. Gabby said that she'd accept the reward but that she needed an additional $450 for the repairs she did. Gabby told Lars that if he didn't pay her she'd simply toss the computer into a river. Lars was extremely worried because the computer contained very important information, so he agreed to pay. When he noticed how much Gabby had improved the computer's performance, he offered to sign a contract to pay Gabby $1,000 total—$500 for the aforementioned items and another $500 for further improvements that Gabby could add. Gabby agreed. Which one of the following accurately describes the parts of this contract, if any, that are enforceable?

Only the portion of the contract related to the $500 in additional improvements is enforceable. (Only the portion of the contract related to the $500 in additional improvements is enforceable. A threat to destroy valuable property of a person can constitute duress.)

A limited liability company (LLC) is a business entity combining advantages of corporations and of

Partnerships.(LLC is a form of business entity which combines the advantages of corporations (limited liability) and partnerships (tax advantages).)

Martin, a 15-year-old boy, carelessly tossed a glass bottle over the heads of several people toward a recycling bin 15 feet away. Luckily, Martin did not hit anybody between him and the recycling bin, and the glass fell perfectly into the bin. Unluckily, a private investigator was hiding in the recycling bin at that moment and suffered a concussion from Martin's bottle. Which one of the following is the most significant legal issue that the investigator might face in a negligence claim against Martin?

Proximate cause (Proximate cause is the most significant legal issue that the investigator might face in a negligence claim against Martin, because Martin cannot be liable for results that could not have been reasonably foreseen.)

Which one of the following is an element of fraud that requires proof?

Reasonable reliance (Reasonable reliance concerns a misrepresentation which must be a reasonable inducement to the other party to act. Reliance must be justified)

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

Relevant to an ongoing criminal investigation. (The Act extends the government's ability to obtain personal information simply by certifying that the information likely to be obtained is relevant to an ongoing criminal investigation.)

Which one of the following is a reason for agency termination?

Renunciation of authority (An agent's termination of the agency relationship is a renunciation of authority.)

The type of insurance agent who derives all powers and duties directly from the agency contract is the

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. Special agents are more restricted, and brokers represent the public rather than the insurer. The general agent has broad powers to enter into contracts on behalf of one or more insurers.)

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

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. A general warranty states the title is free of all encumbrances and a bargain-and-sale deed transfers real property to a buyer for valuable consideration but does not address the validity of the title. A quit-claim deed contains no warranties.)

Which one of the following is the total amount of capital contributed to a corporation by its shareholders?

Stated capital (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.)

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. (This is an example of 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 reinforces the principle of indemnity?

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.)

Susan owns and operates a gift shop. Which one of the following standards of care does Susan owe to patrons of her store?

Susan must take steps to ensure that the premises are reasonably safe. (Susan must take steps to ensure that the premises are reasonably safe. A shopper, a restaurant guest, and a theater patron are examples of business invitees. For invitees, the land occupier owes a duty to exercise reasonable care to keep the premises reasonably safe and to warn of concealed dangerous conditions. The occupier need not warn of dangers of which the invitee is aware.)

Generally, which one of the following describes how The Patriot Act of 2001 affects the government's ability to gain access to financial information and business records?

The Patriot Act broadens the government's ability to obtain business records, to issue subpoenas, and to gain access to personal financial information without any evidence of wrongdoing. (The Patriot Act broadens the government's ability to obtain business records, to issue subpoenas, and to gain access to personal financial information without any evidence of wrongdoing.)

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?

The Payment Card Industry Data Security Standard (PCI DSS) (The Payment Card Industry Data Security Standard (PCI DSS) should be part of Emily's program. It is not a law but a set of standards that must be adopted by organizations that process large volumes of credit card transactions. FISMA apples to federal agencies.)

Oliver contacted his insurance agent Maria about homeowners insurance. Oliver said: "I want homeowners insurance." Maria responded: "You got it." Which one of the following is the best statement of why no agreement to provide insurance was likely reached by the parties?

The agreement was not sufficiently specific on key terms. (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.)

Which one of the following legal systems relies on scholarly interpretations of written codes and constitutions, rather than on court decisions?

The civil-law system (The civil-law system relies on scholarly interpretations of written codes and constitutions, rather than on court decisions. ("Common-law system" vs. "civil-law system" should not be confused with "criminal law" vs. "civil law." The former describe entire legal systems, while the latter describe classifications of U.S. law.)

After becoming intoxicated at a party, William agreed to sell Tom a car for $1,000. Tom was aware that he and William were both intoxicated. Nevertheless, William knowingly signed the contract with full knowledge of the legal consequences of the agreement. The next day he called Tom and told him to tear up the contract and that he no longer wanted to sell the car because he learned he could sell it for at least $5,000. Which one of the following statements is true regarding William's contract with Tom?

The contract is valid and not voidable. (Contracts made by people under the influence of alcohol who know they are making a legal contract are valid and not voidable. Since Tom did not purposely cause William to be intoxicated to obtain an unfair advantage William has no basis for avoiding the contract.)

Which one of the following is the primary benefit that the doctrine of res ipsa loquitur offers plaintiffs?

The doctrine permits an inference of negligence if the action causing injury was under the defendant's exclusive control and the probability that under the given circumstances the defendant was negligent. (The doctrine permits an inference of negligence if the action causing injury was under the defendant's exclusive control and the probability that under the given circumstances the defendant was negligent. Exclusive control is control by only one person or entity; in tort law the control by the defendant alone of an instrument that caused harm.)

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?

The general duty clause (Employers need only record or report serious injuries and have the general duty to maintain safe workplaces.)

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?

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.)

When a defendant is liable under the dangerous instrumentality doctrine, which one of the following is the act that creates the liability?

The negligent act is the act of negligently permitting a child to obtain or use a dangerous instrumentality that harms a third party. (The negligent act is the act of negligently permitting a child to obtain or use a dangerous instrumentality that harms a third party.)

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?

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.)

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?

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.)

Which one of the following statements is true regarding contract rights?

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.)

The state court is dealing with a case involving an unusual domestic animal. They can find no prior case or previous law that directly applies, in their state or any other state. This case is known as a

Threshold case. (When courts encounter situations for which they can find no prior case or previous law that directly applies, the unprecedented situations are called threshold cases.)

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?

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.)

Maxco sent unsolicited credit cards to 500 people who had credit scores of 800 or better. Which one of the following laws does this violate?

Truth in Lending Act (This violates the Truth in Lending Act, under which companies can't issue credit cards to people who don't request or apply for them.)

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

Undue influence. (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 undue influence. Fraud is the misrepresentation of facts that causes harm to another. Duress is 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. Innocent misrepresentation is similar to fraud but without intention.)

Katie purchased several hundred acres and was considering building houses on the land and turning it into a residential subdivision. Katie made a contract with Leah, whereby Leah promised to do all plumbing work Katie needed in the subdivision, and Katie promised to only hire Leah if she decided to build houses on the land. This contract is

Unenforceable, for lack of valid consideration. (This contract is unenforceable, for lack of valid consideration. A party's promise to pay for any work it might request of another party is not binding because the promisor might ask for no work. (Requirements contracts and output contracts can be exceptions.)

Mr. Jones promises to pay his neighbor Alex $25 if he mows his lawn. Which one of the following types of contract was created?

Unilateral contract (Mr. Jones has created a unilateral contract. Under a unilateral contract, a promise is exchanged for an act. When (and if) Alex mows the lawn, a contract will be formed and Mr. Jones will be required to pay him $25. A bilateral contract requires the agreement of both the buyer and seller.)

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?

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).

In contract liability cases one of the questions to be answered in determining the parties' liabilities and rights includes

What was the extent of the agent's authority? (In contract liability cases, "What was the extent of the agent's authority?" is one of the questions that must be answered to determine parties' liabilities and rights.)

Upon delivery, the buyer has the right to inspect the goods as a condition to acceptance and payment. Buyers have no right to inspect in which one of the following situations?

When the carrier delivers the goods COD (collect on delivery) (When the carrier delivers the goods COD (collect on delivery), the buyer pays when these goods are delivered and has no right to inspect the goods as a condition of acceptance and payment.)

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?

When the strike is over a labor contract, the employer can hire replacement employees and refuse to reinstate the striking employees. (Employers cannot lock out employees to gain a more favorable position. When a strike is over a labor contract, the employer can hire replacement employees and refuse to reinstate the striking employees.)

Which one of the following is the name of the suit that an employee can bring against an employer for illegal termination?

Wrongful discharge (Wrongful discharge is a cause of action that an employee might have against an employer for illegal termination of employment.)

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?

Yes, because it reflects the essential elements of a contract. (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.)

Hugo opened a small cookie shop on Main Street. He entered into a requirements contract with Lily, a sugar supplier. Hugo lied to Lily during the negotiations of the contract and told her that he owned a coffee shop. Hugo erroneously thought that he might get a better price from Lily if she thought he sold coffee instead of cookies, but, in fact, Lily's price had nothing to do with Hugo's business. Lily eventually found out that Hugo lied, and she wanted to use her discovery to terminate the contract. Is this contract enforceable?

Yes, the contract is enforceable, and Lily does not have any legal justification for terminating the contract.(Yes, the contract is enforceable, and Lily does not have any legal justification for terminating the contract., The sixth element of fraud, detriment, is missing.)