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AIC 301 - final exam prep questions ALL
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- Which one of the following elements must exist in order to prove fraud? o A. A representation that was related to a past, existing, or future fact. o B. A representation, whether true or untrue, that was made maliciously. o C. The intent of the representation was to influence or deceive. (Correct Answer) o D. The plaintiff may or may not have acted anyway, but the representation influenced the decision. Explanation: Fraud requires the intent to deceive or influence, which is covered by option C.
- Carla is an attorney in the legal department for an insurer. She is drafting a document that details types of coverage sought, the object or premises to be insured, the amount of insurance, the insured's name, and the duration of coverage. Carla is drafting a(n): o A. Lawful objective. o B. Genuine assent. o C. Agreement to insure. (Correct Answer) o D. Offer to insure. Explanation: This document is outlining the terms of the insurance agreement, which makes it an "agreement to insure."
- While driving, Karl's foot slips off the brake and his car rolls into the back of Sunny's vehicle. No one is hurt, but the accident caused a large dent in the back bumper of Sunny's vehicle. For which one of the following types of damages is Sunny eligible? o A. General damages o B. Special damages (Correct Answer) o C. Incidental damages o D. Bad-faith damages Explanation: Special damages compensate for measurable losses, like the cost of repairing Sunny's vehicle.
- In contract cases involving breach of duty of good faith, which one of the following types of damages might a court impose in addition to actual damages? o A. Compensatory o B. Extracontractual (Correct Answer) o C. Consequential o D. Mitigation Explanation: Extracontractual damages are awarded when a party breaches good faith, going beyond the usual contract damages.
- Which one of the following contractual rights is assignable without the obligor's consent? o A. Damages for personal injury o B. Personal rights and duties o C. Contract restrictions o D. A right to collect a debt (Correct Answer) Explanation: A right to collect a debt can generally be assigned without the consent of the obligor.
o D. The manufacturer of the airplane fuel created a product that was inherently dangerous. Explanation: The escape of dangerous substances onto another's property is characteristic of ultrahazardous activities.
- Which one of the following correctly notes a difference between nonwaiver agreements and reservation of rights letters? o A. Only reservation of rights letters allow the insurer to retain the right to deny coverage later. o B. The reservation of rights letter provides unilateral notice to the insured. (Correct Answer) o C. Reservation of rights letters are generally not enforced by the courts. o D. Only nonwaiver agreements prevent insured's subsequent claims for waiver. Explanation: Reservation of rights letters provide notice to the insured and allow the insurer to defend the case without waiving their right to deny coverage later.
- Tanya leased a building for use as a restaurant. In the process, she purchased and installed a removable pizza oven. At the end of the lease, Tanya's landlord told her the pizza oven was a property alteration because it was attached to real property and must stay with the building. In this situation, the pizza oven is:
- A. A property alteration.
- B. An improvement or betterment.
- C. A trade fixture. (Correct Answer)
- D. A leasehold interest. Explanation: A trade fixture is personal property that can be removed by the tenant at the end of the lease.
- All of the following debts are not dischargeable in bankruptcy, EXCEPT:
- A. Services obtained by fraud
- B. Most student loans
- C. Payments owed on leases (Correct Answer)
- D. Alimony Explanation: Payments owed on leases can typically be discharged in bankruptcy under certain circumstances, unlike the other debts listed.
- InsurCo executives are concerned about some new legislation so they write to their state's department of insurance for guidance. The department writes back with advice about the new law. When an administrative agency clarifies statutes for regulated parties, it is writing which one of the following?
- A. Interpretive rule, and it is binding on the regulated parties.
- B. Legislative rule, and it is non-binding.
- C. Legislative rule, and it is binding on the regulated parties.
- D. Interpretive rule, and it is non-binding. (Correct Answer) Explanation: Interpretive rules provide non-binding guidance and are meant to clarify existing laws without enforcing new mandates.
- John contracts with Rex to purchase three steel braces by April 5. In the contract, they agree that the amount of damages either of them would pay in the event of breach would be $50,000. The $50,000 is the result of their good faith effort to estimate actual damages that probably would result from a breach. These types of damages are known as:
- A. Special damages
- B. Punitive damages
- C. Liquidated damages (Correct Answer)
- D. Equitable remedies Explanation: Liquidated damages are pre-determined amounts agreed upon by the parties in the contract to cover potential breaches.
- C. But Leon cannot rent the property for at least 90 days subsequent to the property abandonment.
- D. And invoke constructive eviction. Explanation: Abandonment can be treated as anticipatory breach, allowing the landlord to claim damages for the remaining rent.
- In a strict liability case against toothpaste manufacturer Company P, plaintiff Carla claimed that the toothpaste caused enamel erosion which required her to have extensive dental procedures to fix her teeth. In a products liability case based on strict liability, Carla must prove that Company P:
- A. Made toothpaste that was dangerously defective when it left the manufacturer. (Correct Answer)
- B. Did not use the utmost care in making the toothpaste.
- C. Misrepresented the qualities of the toothpaste.
- D. Was aware of the potential for enamel erosion and intended the harm. Explanation: Strict liability requires proving that the product was defectively designed or manufactured, causing harm, regardless of intent or negligence.
- Len purchased a lawn roller, and once he put it together and filled it with water he learned that the water leaked out during use. The gasket was not a proper fit, and the store or manufacturer would not refund his purchase price or attempt to resolve the issue. Len's best basis for a lawsuit is which one of the following?
- A. Failure to warn
- B. Negligence
- C. False advertising
- D. Implied warranty of merchantability (Correct Answer) Explanation: The implied warranty of merchantability guarantees that the product will be fit for ordinary use. If it’s defective, Len may have a claim under this warranty.
- Sara is an attorney who is preparing for trial. So far in the case she has prepared pleadings and a motion. Which one of the following of Sara's documents is a formal written statement of the facts and claims of each party to the lawsuit?
- A. Complaint
- B. Motion
- C. Pleading (Correct Answer)
- D. Allegation Explanation: Pleadings are formal written documents in a lawsuit that outline the claims, defenses, and issues to be resolved in court.
- Which one of the following is a defense to libel and slander?
- A. Retraction (Correct Answer)
- B. Unconditional privilege
- C. Absolute knowledge
- D. Valid information Explanation: A retraction of a defamatory statement can serve as a defense, potentially mitigating the harm caused by libel or slander.
- Argot Mutual drafts the wording of its insurance contracts. Because Argot determines the exact wording of the contract, the insureds have no choice but to either accept the policy wording as is, or purchase insurance elsewhere. Therefore, Argot's policy is considered to be a:
- A. Contract of adhesion. (Correct Answer)
- B. Conditional contract.
- C. Contract of indemnity.
- D. Contract of good faith. Explanation: A contract of adhesion is one where one party dictates the terms, and the other party has little to no ability to negotiate.
- D. Creditor beneficiary. (Correct Answer) Explanation: Katarina is a creditor beneficiary because the promise was made to benefit her by paying off Luis's debt.
- A product has been making people ill, and a number of the victims have filed a class- action lawsuit against its manufacturer. Which one of the following sets of elements would the trial court consider to certify this as a class action suit?
- A. Commonality, numerosity, adequacy of representation, typicality. (Correct Answer)
- B. Numerosity, commonality, typicality, amount of damages.
- C. Amount of damages, adequacy of representation, commonality, typicality.
- D. Adequacy of representation, numerosity, commonality, amount of damages. Explanation: To certify a class action, the court considers whether the claims are common across the group, whether there are enough class members (numerosity), whether the class is adequately represented, and whether the claims are typical of the class. The act of leaving a dangerous article such as a gun or car with a person who the lender knows, or should know, is likely to use it in an unreasonably risky manner is known as Select one: A. Negligent entrustment. B. Contributory negligence. C. Negligent supervision. D. The dangerous instrumentality doctrine. - answer_A. Negligent entrustment. There was a large unmarked sinkhole on Charlotte's property, a short distance from a public road. One evening, a police officer chased a mugger off the road and onto Charlotte's property. Both the officer and the mugger fell into the hole and were injured. Which one of the following best answers whether Charlotte is liable for the injuries to the police officer and/or to the mugger? Select one:
A. Charlotte is not liable to either the officer or the mugger, because occupiers of land have no duty to correct defects abutting sidewalks or streets. B. Charlotte is liable to both the officer and the mugger, because she had a duty to avoid endangering travelers with an unguarded ditch. C. Charlotte is not liable to the officer or the mugger, because they were both trespassers on her property. D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the tres - answer_D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger. Antonia was a life tenant who occupied a house at 33 Main Street. Emil had a remainder interest in the property and planned to occupy it after Antonia's death. Antonia obtained property insurance covering the house, through Richley Insurance Co. The house was destroyed by fire during Antonia's life estate. Richley must pay the insurance policy proceeds to Select one: A. Emil, under the doctrine of equitable conversion. B. Antonia, since she occupied the house at the time of the fire. C. Antonia, because life tenants can recover the entire value of the property that they insure. D. Emil, because he will ultimately own the property. - answer_C. Antonia, because life tenants can recover the entire value of the property that they insure. Cristobal is in the process of purchasing a home from Leah. They are in the executory period. This means that Select one: A. Cristobal and Leah have signed the real estate sales contract, but have not yet closed. B. Cristobal has made an offer and Leah has accepted verbally. C. Cristobal and Leah have signed the real estate sales contract and have gone to closing. D. Cristobal has made a verbal offer, which Leah is considering. - answer_A. Cristobal and Leah have signed the real estate sales contract, but have not yet closed.
to participate in whatever procedure James suggests, which one of the following dispute resolution procedures is the best choice for James? Select one: A. Mediation B. Negotiation C. Arbitration D. Litigation - answer_C. Arbitration Chloe is investigating Thomas' claim for damage to his automobile. Thomas is not cooperating with Chloe's attempts to schedule an adjuster to inspect the vehicle. Chloe should Select one: A. Issue a unilateral waiver of rights letter. B. Issue a unilateral reservation of rights letter. C. Issue denial for failure to cooperate. D. Ask Thomas to sign a reservation of rights letter. - answer_B. Issue a unilateral reservation of rights letter. Cathy left a bracelet at a jeweler for repair and was given a receipt with the statement, "This establishment is not responsible for loss or damage to any item left in its possession." Which one of the following does the statement on the receipt represent? Select one: A. Assumption of risk B. Comparative negligence C. A hold harmless agreement D. An exculpatory clause - answer_D. An exculpatory clause Blithe Insurance wanted to enter the Jeweler's Block insurance market and began drafting a new Jeweler's Block policy and insurance application form. Blithe believed it was critical that all
insureds under this policy must have a silent alarm system. Because Blithe would not want to write Jeweler's Block insurance for any customer that did not have a silent alarm, Blithe should draft its application and policy so that the customer's application statement about whether it has a silent alarm would be Select one: A. A warranty because an untrue statement would render the policy voidable, even if not material. B. An incontestable clause because the insured could not dispute the truth of the statement. C. A designation because designated matters must be satisfied as a condition of coverage. D. A representation because strict compliance with representations is required. - answer_A. A warranty because an untrue statement would render the policy voidable, even if not material. If the statement is a warranty, if it is untrue, the insurer may deny coverage even if it doesn't involve a material matter. Warranties require strict compliance but representations only require substantial truth. Tommy agreed to mow Heidi's lawn on Wednesday for $35. Tommy then remembered that he had a baseball game on Wednesday. He asked Heidi if it would be okay for his friend, Jeremy, to mow her lawn, and Heidi could just pay the $35 directly to Jeremy. Heidi expressly released Tommy from his obligation. This agreement is known as Select one: A. Contract reformation. B. A novation. C. An accord and satisfaction. D. Substantial performance. - answer_B. A novation. Gabriela is an insurance agent selling a property policy to Oscar. Before the policy was issued, Gabriela assured Oscar that he would not have to add a sprinkler system to the building he was insuring. After coverage was bound, there was a fire in the building and Oscar made a claim for the damages. The insurer denied coverage citing a policy provision that the building be sprinklered. At trial, Gabriela's assurance that sprinklers were not needed was Select one:
A restaurant manager created a new method to cook French fries. Which one of the following describes how the restaurant manager can protect his intellectual property rights? Select one: A. By registering a trade secret with the state. B. By claiming part ownership in the restaurant C. By obtaining a patent D. By filing a copyright notice - answer_C. By obtaining a patent. The restaurant manager can protect his intellectual property rights by obtaining a patent. A patent applies to a new, useful, nonobvious invention. Which one of the following presents the two central elements that can give rise to an estoppel? Select one: A. Knowledge and intentional relinquishment of a known right B. Reliance and detriment C. Incorrect statement of facts and intent D. Voluntary choice and inconsistent rights or privileges - answer_B. Reliance and detriment If Zelda agrees to paint Amy's fingernails for $15 twice a month, Zelda and Amy have formed Select one: A. A unilateral contract. B. An implied-in-law contract. C. An irrevocable contract. D. A bilateral contract. - answer_D. A bilateral contract. Julian was driving his car along a mountain road with his friend Georgia in the passenger seat. Julian's car crashed into a car driven by Magnus. Julian, Georgia, and Magnus were injured.
In the subsequent lawsuit brought by Georgia against Julian and Magnus, the court found that Magnus was 100 percent liable for the accident. Next, Magnus sued Julian and pled that Julian was negligently responsible for his injuries. Which one of the following doctrines bars Magnus' claims against Julian? Select one: A. Special verdict B. Competence rule C. Res judicata D. Collateral estoppel - answer_D. Collateral estoppel Victoria dared her friend, Amy, to jump over a moving car on her bicycle. Amy agreed, and Victoria drove the car. It did not turn out well. The car was damaged, and Amy was injured. Amy's lawyer predicted that she would be found 50 percent at fault. Which one of the following comparative negligence rules would be most helpful to Amy's case if she decided to sue Victoria? Select one: A. The 50 percent comparative negligence rule B. The slight versus gross rule C. The 49 percent comparative negligence rule D. The contributory negligence rule - answer_A. The 50 percent comparative negligence rule. The 50 percent comparative negligence rule would be the most helpful to Amy's case if she decided to sue Victoria, because it would allow her to recover at least reduced damages up to the point at which the plaintiff's negligence constitutes not more than 50 percent of the total. A special characteristic of an insurance policy is that it is a nontransferable contract. This principle means that insureds may not transfer or assign their insurance policies Select one: A. Under any circumstances. B. Except when directed to do so by the insurer.
A. "But for" rule B. Concurrent causation rule C. Foreseeability rule D. Substantial factor rule - answer_A. "But for" rule Magnus met with his insurance agent Larissa to obtain auto insurance. After discussing Magnus' needs, Larissa submitted an application to Barnley Insurance Co., signed by Magnus, requesting $100,000 in liability coverage, and comprehensive and collision coverage with a $ deductible. Barnley issued the policy, but with $25,000 liability limits and without comprehensive and collision coverage. Barnley's action was Select one: A. An offer. B. A solicitation of an offer. C. An acceptance. D. A counteroffer. - answer_D. A counteroffer. Hugo opened a small cookie shop on Main Street. He entered into a requirements contract with Lily, a sugar supplier. Hugo lied to Lily during the negotiations of the contract and told her that he owned a coffee shop. Hugo erroneously thought that he might get a better price from Lily if she thought he sold coffee instead of cookies, but, in fact, Lily's price had nothing to do with Hugo's business. Lily eventually found out that Hugo lied, and she wanted to use her discovery to terminate the contract. Is this contract enforceable? Select one: A. No, the contract is not enforceable, because Hugo committed fraud when he lied about the nature of his shop. B. Yes, the contract is enforceable, and Lily does not have any legal justification for terminating the contract. C. Yes, the contract is enforceable, but Lily can choose to avoid the contract because of Hugo's misrepresentation.
D. No, the contract is not enforceable, - answer_B. Yes, the contract is enforceable, and Lily does not have any legal justification for terminating the contract.
