CPCU 530: Applying Legal Concepts to
Insurance fully solved already passed
contract - correct answer ✔✔a legally enforceable agreement between two or more parties
offeror - correct answer ✔✔the party to a contract who promises to give something in return for a
promise or an act by another party
offeree - correct answer ✔✔the party to a contract who makes a promise or acts in return for something
offered by another party
consideration - correct answer ✔✔something of value or bargained for and exchanged by the parties to
a contract
bilateral contract - correct answer ✔✔a contract in which each party promises a performance
unilateral contract - correct answer ✔✔a contract in which only one party makes a promise or
undertakes the requested performance
executed contract - correct answer ✔✔a contract that has been completely performed by both parties
executory contract - correct answer ✔✔a contract that has not been completely performed by one or
both of the parties
express contract - correct answer ✔✔a contract whose terms and intentions are explicitly stated
implied contract - correct answer ✔✔a contract whose terms and intentions are indicated by the actions
of the parties to the contract and the surrounding circumstances
,uniform commercial code (UCC) - correct answer ✔✔a model code that has been adopted in whole or in
part by each state and whose purpose is to provide a consistent legal basis for business transactions
throughout the US and its territories
warranty - correct answer ✔✔a written or an oral statement in a contract that certain facts are true
express warranty - correct answer ✔✔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
implied warranty - correct answer ✔✔an obligation that the courts impose on a seller to warrant certain
facts about a product even though not expressly stated by the seller
bailment - correct answer ✔✔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
employment at will - correct answer ✔✔a legal doctrine under which an employer may terminate any
employee at any time for any reason or for no reason
wrongful discharge - correct answer ✔✔a cause of action an employee may have against an employer
for illegal termination of employment
bonda fide occupational qualification (BFOQ) - correct answer ✔✔the minimum qualification, under
federal antidiscrimination laws, that an employee needs in order to be able to perform the duties of a
particular job
nonexempt employee - correct answer ✔✔an employee who is paid by the hour and who receives
hourly overtime pay
exempt employee - correct answer ✔✔an employee who is paid a salary and who does not receive
overtime pay
, conditional contract - correct answer ✔✔a contract that one or more parties must perform only under
certain conditions
utmost good faith - correct answer ✔✔an obligation to act in complete honesty and to disclose all
relevant facts
material fact - correct answer ✔✔a fact that is significant to a decision or matter at hand
misrepresentation - correct answer ✔✔a false statement of a material fat on which a party relies
incontestable clause - correct answer ✔✔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
contestable period - correct answer ✔✔a period during which an insurer can challenge the validity of a
life insurance policy
contract of adhesion - correct answer ✔✔any contract in which one party is put in "take-it-or-leave-it"
position and must either accept the contract as written by the other party or reject the contract entirely
contract of indemnity - correct answer ✔✔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
principle of indemnity - correct answer ✔✔the principle that insurance policies should provide a benefit
no greater than the loss suffered by an insured
valued policy - correct answer ✔✔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
binder - correct answer ✔✔a temporary written or oral agreement to provide insurance coverage until a
formal written policy is issued
Insurance fully solved already passed
contract - correct answer ✔✔a legally enforceable agreement between two or more parties
offeror - correct answer ✔✔the party to a contract who promises to give something in return for a
promise or an act by another party
offeree - correct answer ✔✔the party to a contract who makes a promise or acts in return for something
offered by another party
consideration - correct answer ✔✔something of value or bargained for and exchanged by the parties to
a contract
bilateral contract - correct answer ✔✔a contract in which each party promises a performance
unilateral contract - correct answer ✔✔a contract in which only one party makes a promise or
undertakes the requested performance
executed contract - correct answer ✔✔a contract that has been completely performed by both parties
executory contract - correct answer ✔✔a contract that has not been completely performed by one or
both of the parties
express contract - correct answer ✔✔a contract whose terms and intentions are explicitly stated
implied contract - correct answer ✔✔a contract whose terms and intentions are indicated by the actions
of the parties to the contract and the surrounding circumstances
,uniform commercial code (UCC) - correct answer ✔✔a model code that has been adopted in whole or in
part by each state and whose purpose is to provide a consistent legal basis for business transactions
throughout the US and its territories
warranty - correct answer ✔✔a written or an oral statement in a contract that certain facts are true
express warranty - correct answer ✔✔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
implied warranty - correct answer ✔✔an obligation that the courts impose on a seller to warrant certain
facts about a product even though not expressly stated by the seller
bailment - correct answer ✔✔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
employment at will - correct answer ✔✔a legal doctrine under which an employer may terminate any
employee at any time for any reason or for no reason
wrongful discharge - correct answer ✔✔a cause of action an employee may have against an employer
for illegal termination of employment
bonda fide occupational qualification (BFOQ) - correct answer ✔✔the minimum qualification, under
federal antidiscrimination laws, that an employee needs in order to be able to perform the duties of a
particular job
nonexempt employee - correct answer ✔✔an employee who is paid by the hour and who receives
hourly overtime pay
exempt employee - correct answer ✔✔an employee who is paid a salary and who does not receive
overtime pay
, conditional contract - correct answer ✔✔a contract that one or more parties must perform only under
certain conditions
utmost good faith - correct answer ✔✔an obligation to act in complete honesty and to disclose all
relevant facts
material fact - correct answer ✔✔a fact that is significant to a decision or matter at hand
misrepresentation - correct answer ✔✔a false statement of a material fat on which a party relies
incontestable clause - correct answer ✔✔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
contestable period - correct answer ✔✔a period during which an insurer can challenge the validity of a
life insurance policy
contract of adhesion - correct answer ✔✔any contract in which one party is put in "take-it-or-leave-it"
position and must either accept the contract as written by the other party or reject the contract entirely
contract of indemnity - correct answer ✔✔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
principle of indemnity - correct answer ✔✔the principle that insurance policies should provide a benefit
no greater than the loss suffered by an insured
valued policy - correct answer ✔✔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
binder - correct answer ✔✔a temporary written or oral agreement to provide insurance coverage until a
formal written policy is issued
