AIC 301 EXAM QUESTIONS AND ANSWERS LATEST
VERSION (ALREADY GRADED A+)
What are the elements of a legally binding contract?
To be legally binding, contracts must:
• Contain an agreement between all parties
• Involve parties with the legal capacity to contract
• Contain mutual assent
• Involve consideration
• Have a legal purpose
• Be in the form prescribed by law
What are the similarities and differences between bilateral and unilateral contracts?
In bilateral contracts, each party promises to perform an act in exchange for the act of the other party.
In a unilateral contract, one party promises to pay for an act of the other party. If the act isn't
performed, no payment is required
What are the similarities and differences between voidable and void contracts?
A voidable contract is a valid contract that can continue in force, and the parties can execute it
completely unless an innocent or injured party chooses to avoid it. The behavior of one of the
contracting parties, such as an act of fraud or illegal deceit, can also make a contract voidable. A void
contract is an agreement that never met the necessary criteria to be considered a contract
What are the two remedies available to the plaintiff if fraud is proved in a given case?
If fraud is proved, the plaintiff can seek one of two remedies: •
Rescission—If the court rescinds the contract, the plaintiff has no further duties under it and is entitled
to reimbursement of all payments made to the defendant. The plaintiff also must return anything of
value received under the contract. The court's goal is to restore the parties to the condition they were in
before they entered the contract.
• Sue for damages—If rescission wouldn't make the plaintiff whole, the plaintiff can sue for damages in a
tort action. The plaintiff can seek compensatory damages for quantifiable harm and punitive damages to
further punish the defendant and deter future, similar fraudulent actions. The plaintiff must prove the
extent of the loss to receive damages.
What are two things the insurer must prove to establish that fraudulent concealment occurred?
To establish that fraudulent concealment occurred, the insurer must prove two things:
• The insured knew that the fact concealed was material.
• The insured concealed the fact with the intent to defraud.
VERSION (ALREADY GRADED A+)
What are the elements of a legally binding contract?
To be legally binding, contracts must:
• Contain an agreement between all parties
• Involve parties with the legal capacity to contract
• Contain mutual assent
• Involve consideration
• Have a legal purpose
• Be in the form prescribed by law
What are the similarities and differences between bilateral and unilateral contracts?
In bilateral contracts, each party promises to perform an act in exchange for the act of the other party.
In a unilateral contract, one party promises to pay for an act of the other party. If the act isn't
performed, no payment is required
What are the similarities and differences between voidable and void contracts?
A voidable contract is a valid contract that can continue in force, and the parties can execute it
completely unless an innocent or injured party chooses to avoid it. The behavior of one of the
contracting parties, such as an act of fraud or illegal deceit, can also make a contract voidable. A void
contract is an agreement that never met the necessary criteria to be considered a contract
What are the two remedies available to the plaintiff if fraud is proved in a given case?
If fraud is proved, the plaintiff can seek one of two remedies: •
Rescission—If the court rescinds the contract, the plaintiff has no further duties under it and is entitled
to reimbursement of all payments made to the defendant. The plaintiff also must return anything of
value received under the contract. The court's goal is to restore the parties to the condition they were in
before they entered the contract.
• Sue for damages—If rescission wouldn't make the plaintiff whole, the plaintiff can sue for damages in a
tort action. The plaintiff can seek compensatory damages for quantifiable harm and punitive damages to
further punish the defendant and deter future, similar fraudulent actions. The plaintiff must prove the
extent of the loss to receive damages.
What are two things the insurer must prove to establish that fraudulent concealment occurred?
To establish that fraudulent concealment occurred, the insurer must prove two things:
• The insured knew that the fact concealed was material.
• The insured concealed the fact with the intent to defraud.
