CAIB 3 EXAM 2025 UPDATE/PRACTICE QUESTIONS AND
CORRECT VERIFIED ANSWERS (complete solutions) ASSURED
SUCCESS/GRADED A+!!!
The Sale of Goods Act sets out the contractual responsibilities of sellers for their
products. This Statute Law contains a number of implied warranties that form
part of every contract for the sale of goods.
Identify one implied warranty which is of significance to sellers of products. -
CORRECT ANSWER-fitness of a business's product(s) for a particular purpose
The Sale of Goods Act also addresses a buyer's responsibility to exercise care as to
the suitability and quality of the products purchased.
State the exception to this general rule. - CORRECT ANSWER-When a buyer
makes known the particular purpose for which the goods are required, and relies
on the seller's skill or judgment, there is an implied condition that the goods will
be reasonably fit for such purpose. If they are not, the seller will be liable for
damages should injury or property damage result from their use.
Your client, the proprietor of pub, is insured under the Commercial General
Liability Policy. Indicate whether or not the policy would respond in the following
instances. State COVERED or NOT COVERED
,Identify two activities that impose strict liability on the person conducting the
activity. - CORRECT ANSWER-The setting off of explosives , the lighting of fires,
the operation of aircraft, the keeping of a dangerous thing on the premises, such
as water in a dam or cistern; gas; electricity; wild animals.
What is the position of the defendant in a legal action when the law deems the
defendant strictly liable? - CORRECT ANSWER-The defendant has the right to
establish a defense against an action alleging strict liability.
What determines if a product is defective? - CORRECT ANSWER-A defective
product is one that contained something that it should not have; or something
that should have been there was omitted in its manufacture.
The insured entered a claim for the recovery of a $1,000 payment made as a
goodwill gesture to a customer, a well-known entertainer, who injured himself
during a fall from a bar stool - CORRECT ANSWER-NOT COVERED - REFERENCE:
Ch. 2, pg. 4
What is the name given to the collection of written decisions? - CORRECT
ANSWER-Case Law
Explain the concept of the Rule of Precedent. - CORRECT ANSWER-Current court
decisions must follow those made in cases having similar circumstances, which
allows the development of a logical body of general principles against which
specific cases to be compared.
Explain the meaning of the term "damages". - CORRECT ANSWER-
Compensation in money for the loss or damage suffered.
,Compensatory damages for bodily injury are an amalgamation of general and
special damages, and based on a number of factors which the courts take into
account.
State four factors that influence the determination of
compensatory damages. - CORRECT ANSWER-1. extent of financial support
provided by the injured party to his or her family
2. social position
3. reputation
4. financial circumstances
5. ability of the plaintiff's legal representative
Explain the assumption that lies at the centre of the Doctrine of Strict Liability. -
CORRECT ANSWER-Based on the assumption that certain activities are so
hazardous that, in the event of injury or damage arising out of them, the person
conducting the activity shall be presumed to be legal liable
Your client, the proprietor of pub, is insured under the Commercial General
Liability Policy. Indicate whether or not the policy would respond in the following
instances. State COVERED or NOT COVERED
The insured had to cancel the booking of the pub for a large private event
because a ruptured pipe had caused serious water damage to the premises and
the restoration would not be completed in time. The insured was sued for breach
, of contract by the band that was hired to perform at this event. - CORRECT
ANSWER-NOT COVERED - REFERENCE: Ch. 2, pg. 10
Your client, the proprietor of pub, is insured under the Commercial General
Liability Policy. Indicate whether or not the policy would respond in the following
instances. State COVERED or NOT COVERED
The insured received a $3,000 bill for a dental procedure from a customer who
broke a tooth when she bit on a piece of bone in the pizza she had consumed at
the pub. The customer had informed the server of the incident - CORRECT
ANSWER-COVERED - REFERENCE: Ch. 2, pg. 3, 5
The Commercial General Liability Policy does not respond to claims against the
insured for bodily injuries sustained by employees while performing the duties of
their job.
State the underlying reason for this exclusion. - CORRECT ANSWER-Because
most employees are covered under the provincial Workers' Compensation Plan.
Coverage is provided on a no fault basis.
What options are available to the insured to cover this exposure? - CORRECT
ANSWER-To purchase Employer's Liability coverage or voluntarily enrol all
employees under the provincial Workers' Compensation Plan.
The insured hired a roofing contractor to replace the old tar and gravel roof on
the insured's building, which is flanked by two other buildings not owned by the
CORRECT VERIFIED ANSWERS (complete solutions) ASSURED
SUCCESS/GRADED A+!!!
The Sale of Goods Act sets out the contractual responsibilities of sellers for their
products. This Statute Law contains a number of implied warranties that form
part of every contract for the sale of goods.
Identify one implied warranty which is of significance to sellers of products. -
CORRECT ANSWER-fitness of a business's product(s) for a particular purpose
The Sale of Goods Act also addresses a buyer's responsibility to exercise care as to
the suitability and quality of the products purchased.
State the exception to this general rule. - CORRECT ANSWER-When a buyer
makes known the particular purpose for which the goods are required, and relies
on the seller's skill or judgment, there is an implied condition that the goods will
be reasonably fit for such purpose. If they are not, the seller will be liable for
damages should injury or property damage result from their use.
Your client, the proprietor of pub, is insured under the Commercial General
Liability Policy. Indicate whether or not the policy would respond in the following
instances. State COVERED or NOT COVERED
,Identify two activities that impose strict liability on the person conducting the
activity. - CORRECT ANSWER-The setting off of explosives , the lighting of fires,
the operation of aircraft, the keeping of a dangerous thing on the premises, such
as water in a dam or cistern; gas; electricity; wild animals.
What is the position of the defendant in a legal action when the law deems the
defendant strictly liable? - CORRECT ANSWER-The defendant has the right to
establish a defense against an action alleging strict liability.
What determines if a product is defective? - CORRECT ANSWER-A defective
product is one that contained something that it should not have; or something
that should have been there was omitted in its manufacture.
The insured entered a claim for the recovery of a $1,000 payment made as a
goodwill gesture to a customer, a well-known entertainer, who injured himself
during a fall from a bar stool - CORRECT ANSWER-NOT COVERED - REFERENCE:
Ch. 2, pg. 4
What is the name given to the collection of written decisions? - CORRECT
ANSWER-Case Law
Explain the concept of the Rule of Precedent. - CORRECT ANSWER-Current court
decisions must follow those made in cases having similar circumstances, which
allows the development of a logical body of general principles against which
specific cases to be compared.
Explain the meaning of the term "damages". - CORRECT ANSWER-
Compensation in money for the loss or damage suffered.
,Compensatory damages for bodily injury are an amalgamation of general and
special damages, and based on a number of factors which the courts take into
account.
State four factors that influence the determination of
compensatory damages. - CORRECT ANSWER-1. extent of financial support
provided by the injured party to his or her family
2. social position
3. reputation
4. financial circumstances
5. ability of the plaintiff's legal representative
Explain the assumption that lies at the centre of the Doctrine of Strict Liability. -
CORRECT ANSWER-Based on the assumption that certain activities are so
hazardous that, in the event of injury or damage arising out of them, the person
conducting the activity shall be presumed to be legal liable
Your client, the proprietor of pub, is insured under the Commercial General
Liability Policy. Indicate whether or not the policy would respond in the following
instances. State COVERED or NOT COVERED
The insured had to cancel the booking of the pub for a large private event
because a ruptured pipe had caused serious water damage to the premises and
the restoration would not be completed in time. The insured was sued for breach
, of contract by the band that was hired to perform at this event. - CORRECT
ANSWER-NOT COVERED - REFERENCE: Ch. 2, pg. 10
Your client, the proprietor of pub, is insured under the Commercial General
Liability Policy. Indicate whether or not the policy would respond in the following
instances. State COVERED or NOT COVERED
The insured received a $3,000 bill for a dental procedure from a customer who
broke a tooth when she bit on a piece of bone in the pizza she had consumed at
the pub. The customer had informed the server of the incident - CORRECT
ANSWER-COVERED - REFERENCE: Ch. 2, pg. 3, 5
The Commercial General Liability Policy does not respond to claims against the
insured for bodily injuries sustained by employees while performing the duties of
their job.
State the underlying reason for this exclusion. - CORRECT ANSWER-Because
most employees are covered under the provincial Workers' Compensation Plan.
Coverage is provided on a no fault basis.
What options are available to the insured to cover this exposure? - CORRECT
ANSWER-To purchase Employer's Liability coverage or voluntarily enrol all
employees under the provincial Workers' Compensation Plan.
The insured hired a roofing contractor to replace the old tar and gravel roof on
the insured's building, which is flanked by two other buildings not owned by the
