CPCU 530 Ch. 2

Question 1

A legally enforceable agreement between two or more parties in which each party makes some promise to the other

Answer 1

Contract

Question 2

The party to a contract making a prmise

Answer 2

Promisor

Question 3

The party to a contract to whom a promise is made

Answer 3

Promisee

Question 4

The relationship that exists between the parties to a contract

Answer 4

Privity of contract

Question 5

A person who is not a party to a contract but who benefits from it and has a legal right to enforce the contract if it is breached by either of the contracting parties

Answer 5

Third-party beneficiary

Question 6

The failure, without legal excuse, to fulfill a contractual promise

Answer 6

Breach of contract

Question 7

A contract in which each party promises a performance

Answer 7

Bilateral contract

Question 8

A contract in which only one party makes a promise or undertakes the requested performance

Answer 8

Unilateral contract

Question 9

A contract that has been completely performed by both parties

Answer 9

Executed contract

Question 10

A contract that has not been completely performed by one or both of the parties

Answer 10

Executory contract

Question 11

A contract whose terms and intentions are explicitly stated

Answer 11

Express contract

Question 12

A contract whose terms and intentions are indicated by the actions of the parties to the contract and the surronding circumstances

Answer 12

Implied contract

Question 13

A contract that is not express but that the parties presumably intended, either by tactic understanding or by the assumption that it existed

Answer 13

Implied-in-fact contract

Question 14

An obligation that is not an actual contract but that is imposed by law because of the parties’ conduct or some special relationship between them or because one of them would otherwise be unjustly enriched

Answer 14

Implied in law contract

Question 15

A contract that one of the parties can reject (avoid) based on some circumstances surrounded its execution

Answer 15

Voidable contract

Question 16

An agreement that, despite the parties’ intentions, never reaches contract status and is therefore not legally enforceable or binding

Answer 16

Void contract

Question 17

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

Answer 17

Offer

Question 18

The party to a contract who promises to give something in return a promise or an act by another party

Answer 18

Offeror

Question 19

The party to a contract who makes a promise or acts in return for something offered by another party

Answer 19

Offeree

Question 20

A proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer

Answer 20

Counteroffer

Question 21

The assent to an offer that occurs when the party to whom an offer has been made either agrees to the proposal or does what has been proposed

Answer 21

Acceptance

Question 22

The act of giving up or the promise, necessary terms of an agreement

Answer 22

Forbearance

Question 23

The performance of the primary, necessary terms of an agreement

Answer 23

Substantive performance

Question 24

A party to a contract who has the basic or minimal ability to do something about the mental ability to understand problems and make decision

Answer 24

Competent party

Question 25

The return of specific property by court order

Answer 25

Restitution

Question 26

Something of value or bargained for and exchanged by the parties to a contract

Answer 26

Consideration

Question 27

Consideration based on natural love or affection, or on moral duty, that is not sufficient to support contract

Answer 27

Good consideration

Question 28

The consideration necessary and sufficient to support a valid contract

Answer 28

Valuable consideration

Question 29

A promise no supported by valuable consideration and, therefore, not binding

Answer 29

Gratuitous promise

Question 30

An agreement (accord) to substitute performance other than that required in a contract and the carrying out of that agreement (satisfaction)

Answer 30

Accord and satisfaction

Question 31

A legal principle that permits enforcement of a promise made without consideration in order to prevent injustice

Answer 31

Promissory estoppel

Question 32

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred

Answer 32

Insurable interest

Question 33

The charging of an illegally high rate of interest on a loan

Answer 33

Usury

Question 34

The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming othera

Answer 34

Negligence

Question 35

A contractual provision purporting excuse of a party from liability resulting from negligence or an otherwise wrongful act

Answer 35

Exculpatory clause (exculpatory agreement)

Question 36

An agreement between an employer (the principle) and an employee (the agent) to protect the employer's customer, trade secrets, confidential information, and other items for a specific period after an employee relationship has been terminated

Answer 36

Noncomplete agreement

Question 37

An illegal transaction in which both parties are equally at fault

Answer 37

In pari delicto agreement

Question 38

A contract that includes two or more promises, each of which a court can enforce separately

Answer 38

Severable contract

Question 39

Contracting parties actual assent to form a contract or their indication of intent to contract by their actions and words

Answer 39

Genuine assent

Question 40

An intentional misrepresentation resulting in harm to a person or an organization

Answer 40

Fault

Question 41

A statement of fact or opinion made by the insured when applying for insurance, usually in response to a question from the insurer

Answer 41

Representation

Question 42

In insurance, a fact that would affect the insurer's decision to provide or maintain insurance or to settle a claim

Answer 42

Material fact

Question 43

A legal action that voids a principle's bid

Answer 43

Rescission

Question 44

A perception that does not agree with the facts

Answer 44

Mistake

Question 45

A perception by one party to a contract that does not agree with the facts

Answer 45

Unilateral mistake

Question 46

A perception by both parties to a contract that does not agree with the facts

Answer 46

Bilateral mistake

Question 47

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

Answer 47

Duress

Question 48

The improper use of power or trust to deprive a person of free will and substitute another's objective, resulting in lack of genuine assent to a contract

Answer 48

Undue influence

Question 49

A law to prevent fraud and perjury by requiring that certain contracts be in writing and contain the signature of the party responsible for performing that contract

Answer 49

Statue of frauds

Question 50

Tangible property consisting of land, all structures permanently attached to land, and whatever is growing on the land

Answer 50

Real property (realty)

Question 51

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

Answer 51

Uniform Commercial Code (UCC)

Question 52

An event that must occur before a duty of performance arises in a contract

Answer 52

Condition precedent

Question 53

A rule of evidence that limits the terms of a contract evidenced by a writing to those expressed in writing

Answer 53

Parol evidence rule

Question 54

The transfer of rights or a property

Answer 54

Assignment

Question 55

The party to a contract who makes an assignment

Answer 55

Assignor

Question 56

The individual or entity to whom property, rights, or interests have been transferred

Answer 56

Assignee

Question 57

A contract between two parties that benefits a third party

Answer 57

Third party beneficiary contract

Question 58

A third party beneficiary owed a debt that is to be satisfied by performance of a contract

Answer 58

Creditor beneficiary

Question 59

A third party beneficiary who receives the benefits of a contract's performance as a gift from the promisee, with the intent of the contracting parties

Answer 59

Donee beneficiary

Question 60

A third party beneficiary who has no contractual rights but benefits from a contract even though that is not the intent of the parties to the contract

Answer 60

Incidental beneficiary

Question 61

An offer to perform one's duties under a contract

Answer 61

Tender

Question 62

The substitution of a third party for one of the original parties to a contract, releasing the original party from rights and obligations under the contract

Answer 62

Novation

Question 63

An event that must occur at the same time as another condition in a contract

Answer 63

Condition concurrent

Question 64

An event that, if it occurs, discharges a duty of performance in a contract

Answer 64

Condition subsequent

Question 65

A party's refusal to meet obligation under a contract

Answer 65

Repudiation

Question 66

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

Answer 66

Anticipatory breach

Question 67

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

Answer 67

Material breach of contract

Question 68

A payment awarded by a court to reimburse a victim for actual harm

Answer 68

Compensatory damages

Question 69

A payment awarded by a court to indemnify an injured party for losses that result indirectly from a wrong such as a breach of contract or a tort

Answer 69

Consequential damages

Question 70

A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages

Answer 70

Punitive damages (exemplary damages)

Question 71

An intentional or reckless act, extreme or outrageous in nature, causing severe emotional distress that results in physical injury; generally applied in suits for breach of insurance contracts

Answer 71

Bad faith (outrage)

Question 72

A payment awarded by a court that exceeds the usual contract damages for a breach of contract

Answer 72

Extra contractual damages

Question 73

A duty owned by an injured party to a claim to take reasonable measures to minimize or avoid additional injury or loss

Answer 73

Mitigation of damages

Question 74

A reasonable estimation of actual damages, agreed to by contracting parties and included in the contract, to be paid in the event of a breach or for negligence

Answer 74

Liquidated damages

Question 75

A court ordered equitable remedy requiring a party to perform a certain act, often but not always, as a result of a breach of contract

Answer 75

Specific performance

Question 76

A court-ordered equitable remedy requiring a party to act or refrain from acting

Answer 76

Injunction