CPCU 530 Final Exam Questions and Answers With Verified Solutions 2025
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her in his cellar and
demands money from Lily's parents to secure her return. The parents agree to pay and Lily is returned,
but Daniel never receives the money. He sues Lily's parents for breach of contract. Which one of the
following explains why Daniel's contract with Lily's parents is not legally binding? - ✔✔It lacks a legal
purpose
Maria owns a commercial building and places insurance with Bastion Insurance. Because the annual
premium is high, and cash is tight, Maria decides to enter into a premium finance agreement with
Finance Co. ("Finance"). Under the premium finance agreement, Finance pays Bastion the full annual
premium and Maria pays Finance a monthly amount for the premium, a fee and interest. At the
midpoint of the policy year, which one of the following best describes Maria's premium finance
agreement with Finance? - ✔✔A bilateral contract
In February, Ann contracts with Mahdi to deliver clean garden top soil for $30 a cubic yard to Mahdi's
farm in Pennsylvania. No time for delivery is stated in their contract but the parties understand that
Mahdi wants to use the soil for this year's planting season. In March, Ann delivers garden soil that is
contaminated and Mahdi refuses to pay because he believes Ann breached their agreement. Which one
of the following best describes how a court would rule on Mahdi's claim that Ann breached their
agreement? - ✔✔The court would find for Mahdi because Ann's goods are non-conforming.
, Tile Roofing is a contractor specializing in roof installation for homes and commercial accounts. Recently
several Tile Roofing workers have fallen and suffered significant injuries because the workers do not
have any safety harnesses preventing falls. Under which one of the following employee welfare laws
would Tile Roofing potentially be subject to civil or criminal penalties? - ✔✔Occupational Safety and
Health Act
Tool Corporation has operated successfully for decades, but in recent years stiff price competition from
overseas suppliers and a lack of skilled labor at affordable prices have made the company unprofitable.
Tool Corporation has incurred substantial debt to keep the operation running and save jobs, but they
can no longer access bank financing. Tool Corporation believes that it can return to profitability if it
reorganizes. Under which chapter of the bankruptcy code should Tool Corporation file? - ✔✔Chapter 11
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more drinks than Georgia
and is stumbling and slurring his speech. Sensing an opportunity, Georgia proposes that Diego sell her
his expensive Swiss wristwatch for a mere $100 and Diego agrees. The next day, Georgia appears at
Diego's office with $100 asking for the wristwatch. Which one of the following arguments is best for
Diego to avoid the contract? - ✔✔Diego lacked capacity to enter into a contract because he was
inebriated
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
Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her in his cellar and
demands money from Lily's parents to secure her return. The parents agree to pay and Lily is returned,
but Daniel never receives the money. He sues Lily's parents for breach of contract. Which one of the
following explains why Daniel's contract with Lily's parents is not legally binding? - ✔✔It lacks a legal
purpose
Maria owns a commercial building and places insurance with Bastion Insurance. Because the annual
premium is high, and cash is tight, Maria decides to enter into a premium finance agreement with
Finance Co. ("Finance"). Under the premium finance agreement, Finance pays Bastion the full annual
premium and Maria pays Finance a monthly amount for the premium, a fee and interest. At the
midpoint of the policy year, which one of the following best describes Maria's premium finance
agreement with Finance? - ✔✔A bilateral contract
In February, Ann contracts with Mahdi to deliver clean garden top soil for $30 a cubic yard to Mahdi's
farm in Pennsylvania. No time for delivery is stated in their contract but the parties understand that
Mahdi wants to use the soil for this year's planting season. In March, Ann delivers garden soil that is
contaminated and Mahdi refuses to pay because he believes Ann breached their agreement. Which one
of the following best describes how a court would rule on Mahdi's claim that Ann breached their
agreement? - ✔✔The court would find for Mahdi because Ann's goods are non-conforming.
, Tile Roofing is a contractor specializing in roof installation for homes and commercial accounts. Recently
several Tile Roofing workers have fallen and suffered significant injuries because the workers do not
have any safety harnesses preventing falls. Under which one of the following employee welfare laws
would Tile Roofing potentially be subject to civil or criminal penalties? - ✔✔Occupational Safety and
Health Act
Tool Corporation has operated successfully for decades, but in recent years stiff price competition from
overseas suppliers and a lack of skilled labor at affordable prices have made the company unprofitable.
Tool Corporation has incurred substantial debt to keep the operation running and save jobs, but they
can no longer access bank financing. Tool Corporation believes that it can return to profitability if it
reorganizes. Under which chapter of the bankruptcy code should Tool Corporation file? - ✔✔Chapter 11
Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more drinks than Georgia
and is stumbling and slurring his speech. Sensing an opportunity, Georgia proposes that Diego sell her
his expensive Swiss wristwatch for a mere $100 and Diego agrees. The next day, Georgia appears at
Diego's office with $100 asking for the wristwatch. Which one of the following arguments is best for
Diego to avoid the contract? - ✔✔Diego lacked capacity to enter into a contract because he was
inebriated
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
