Contracts Quiz 1 - Topics 1 & 2

Front 1

Insurance professionals should endeavor to place the public interest above their own.

Back 1

Canon 1

Front 2

Insurance professionals should seek continually to maintain and improve their professional knowledge, skills, and competence.

Back 2

Canon 2

Front 3

Insurance professionals should obey all laws and regulations, and should avoid any conduct or activity that would cause unjust harm to others.

Back 3

Canon 3

Front 4

Insurance professionals should be diligent in the performance of their occupational duties and should continually strive to improve the functionality of the insurance mechanism.

Back 4

Canon 4

Front 5

Insurance professionals should aspire to raise the professional and ethical standards of the insurance and risk management profession.

Back 5

Canon 5

Front 6

Insurance professionals should strive to establish and maintain dignifiedand honorable relationships with those whom they serve, with fellowinsurance professionals, and with members of other professions.

Back 6

Canon 6

Front 7

Insurance professionals should assist in improving the public understandingof insurance and risk management.

Back 7

Canon 7

Front 8

CPCUs should honor the integrity of the CPCU designation and respectthe limitations placed on its use.

Back 8

Canon 8

Front 9

CPCUs should assist in maintaining the integrity of the CPCU Code ofProfessional Conduct.

Back 9

Canon 9

Front 10

What are the three universal precepts that "ought to be" qualifying parameters for any belief system chosen by an insurance professional?

Back 10

Honesty, respect for other persons, and respect for others' property

Front 11

From what two sources does business ethics stem from?

Back 11

Both official policy and practical example

Front 12

What is the meaning of the Latin word that "client" is derived for?

Back 12

Lean.

A client is someone under the care and protection of a professional, i.e. leaning on them.

Front 13

What positives can come of a person utilizing their risk management knowledge to act on his/her special duty to spread the knowledge to safeguard others?

Back 13

- Reduce threats to many, within and beyond any given organization

- Build positive relationships for combating tomorrrow's threats

- Begin teaching the future risk management professionals

Front 14

What is the relationship between ethics and risk management?

Back 14

Good risk management requires good ethics, and good ethics require good risk management.

Front 15

What are the required contractual elements?

Back 15

1. Agreement

2. Capacity to contract

3. Consideration

4. Legal purpose

Front 16

What constitutes an agreement?

Back 16

Offer + Acceptance.

Two parties must have a "meeting of the minds."

Front 17

What constitutes an offer?

Back 17

A promise that requires some action by the intended recipient to make an agreement.

Front 18

What makes an offer valid?

Back 18

1. Intent to enter into a contract

2. Definite terms

3. Communication to the offeree

Front 19

What are the three possible responses to an offer?

Back 19

Rejection, counter offer, or acceptance.

Front 20

What are the requirements of a valid acceptance?

Back 20

1. Must be made by the offeree

2. Must be unconditional and unequivocal

3. Must communicate acceptance by appropriate word or act

Front 21

"Unenforceable contract" - what parties lack capacity to contract?

Back 21

1. Minors

2. Insane

3. Intoxicated

4. Artificial entities

Front 22

What is consideration?

Back 22

Something of value given by both parties to a contract that induces them to enter into the agreement.

Front 23

Can illegal or wrongful acts be contracted?

Back 23

No.

Front 24

What types of circumstances constitute unenforceable contracts?

Back 24

1. Fraud

2. Mistake

3. Duress

4. Undue influence

5. Innocent misrepresentation

6. Statue of Frauds

7. Parol Evidence Rule

Front 25

What is fraud?

Back 25

INTENTIONAL misrepresentation intended/resulting in harm to a person or organization.

Front 26

What is a mistake?

Back 26

A perception that does not agree with the facts.

Front 27

What is duress?

Back 27

The use of restraint, violence, or threats to compel a party to act contrary to his wishes or interests.

Front 28

What is undue influence?

Back 28

The improper use of power or trust to deprive a person of free will.

Front 29

What is innocent misrepresentation?

Back 29

A person who has reasonably relied on an innocently misrepresented material fact can later avoid resulting contract due to a lack of genuine assent.

Front 30

What is the Statue of Frauds?

Back 30

A law to prevent fraud and perjury by requiring that certain contracts be in writing and signed.

Front 31

What is the Parol Evidence Rule?

Back 31

All prior negotiations, conversations, and agreements were merged into the writing.

AKA cannot change the terms of the contract, only explain

Front 32

What is repudiation?

Back 32

A party's refusal to meet obligations under a contract.

Front 33

What is an anticipatory breach of contract?

Back 33

A party's unequivocal indication before a contract performance is due that she will not perform when performance is due.

Front 34

What is a material breach?

Back 34

Violation of the agreement that would justify an owner's termination of the contract.

Front 35

What are the different types of contracts?

Back 35

1. Bilateral and unilateral

2. Executed and executory

3. Express and implied

4. Void and voidable

Front 36

What is a bilateral contract vs. a unilateral contract?

Back 36

Bilateral - each party promises a performance.

Unilateral - only one party make a promise or undertakes the requested performance.

Front 37

Examples of bilateral vs. unilateral contracts?

Back 37

B - I will paint your garage, you will give me $500.

U - If I paint your garage, you will give me $500 (If I don’t you give me nothing.)

Front 38

What is an executed contract vs. an executory?

Back 38

Executed - nothing is required of either party = completed contract

Executory - contract that has not been completely performed by one or both parties

Front 39

Examples of executed vs. an executory?

Back 39

Executed: I go onto Amazon buy a shirt my payment is good. They deliver like they are supposed to. We are done.

Executory: I go onto Amazon order a shirt provide my credit card information. They take the payment and do not send me the shirt.-- Still an open requirement under the contract.

Front 40

What is an express contract vs. an implied contract?

Back 40

An express contract is a contract whose terms and conditions are explicitly stated.

An implied contract is a contract whose terms and intentions are indicated by the actions of the parties to the contract and the surrounding circumstances.

Front 41

What is a void vs. voidable contract?

Back 41

Voidable contract = a valid contract that one of the parties can reject based on some problem with its execution.

Void contract = an agreement that despite the parties' intentions, never reaches contract status and therefore is not legally enforceable or binding

Front 42

What are the additional insurance contract characteristics?

Back 42

1. Conditional

2. Involves fortuitous events and exchange of unequal amounts

3. Utmost good faither

4. Adhesion

5. Indemnity

6. Non-transferable contract

Front 43

What is the conditional characteristic?

Back 43

A contract that one or more parties must perform ONLY under certain conditions, i.e. loss.

Front 44

What must a policyholder show to get punitive damages?

Back 44

"Actual malice, fraud, or insult."