CPCU 530 Ch. 4

Question 1

A collection of laws that help prevent parties from becoming involved in fraudulently formed contracts

Answer 1

Statues of fraud

Question 2

The chance of financial loss

Answer 2

Risk

Question 3

A shipping condition under which the buyer pays when the goods are delivered and has no right to inspect the goods as a condition to acceptance and payments

Answer 3

COD (Collect on delivery)

Question 4

An implied warranty that a product is fit for the ordinary purpose for which it is used

Answer 4

Implied warranty of merchantability

Question 5

An implied warranty that a product is fit for a particular purpose; applies if the seller knows about the buyer’s purpose for the product

Answer 5

Implied warranty of fitness for a particular purpose

Question 6

An implied promise in a contract for the sale of goods that the seller has legal ownership of goods and has no knowledgeable of any security interest or other lien on the goods other than those disclosed to the buyer

Answer 6

Implied warranty of title

Question 7

The absolute obligation to pay a negotiable instrument according to its terms

Answer 7

Primary liability

Question 8

The obligation to pay a negotiable instrument only if someone else refuses to pay or accept the instrument

Answer 8

Secondary liability

Question 9

A claim to an instrument by any person and any defense that would be effective in a simple contract transaction

Answer 9

Personal defense

Question 10

A defense of an obligor of a negotiable instrument that may be asserted even against a holder in due course

Answer 10

Real defense

Question 11

A legal document that provides title to the goods in storage and assures deliver to the holder of the receipt

Answer 11

Warehouse receipt

Question 12

A document acknowledging receipt of goods from the shipper, given by the carrier, which includes the terms of the contract of carriage for goods

Answer 12

Bill of lading

Question 13

A person or organization in the business of transporting property to others

Answer 13

Carrier

Question 14

The temporary transfer of property’s custody

Answer 14

Bailment

Question 15

The owner of the personal property in a bailment

Answer 15

Bailor

Question 16

The party temporarily processing the personal property in a bailment

Answer 16

Bailee

Question 17

The party who is shipping goods

Answer 17

Consignor

Question 18

The person or organization that receives property being transported by a carrier

Answer 18

Consignee

Question 19

Cash, or near cash assets, that a principal pledges to secure credit, a loan, or other obligations

Answer 19

Collateral

Question 20

An interest in property (real or personal) that allows the property to be sold on default to satisfy the debt for which the security interest was given

Answer 20

Security interest

Question 21

A security device by which a borrower guarantees payments by delivering collateral to the lender to hold as security for the debt

Answer 21

Pledge

Question 22

Tangible, movable personal property

Answer 22

Chattel

Question 23

A security arrangement that has been filed with the appropriate court to provide the surety a priority interest over others who may also have security interests in the property

Answer 23

Perfected security interest

Question 24

Knowledge that a person is assumed by law to have because that knowledge could be gained by reasonable observation or inspection

Answer 24

Constructive notice

Question 25

The person to whom a negotiable instrument has been issued or endorsed and who possesses it for value, in good faith and without notice that it may not be valid, can be claimed by another, is overdue, or was previously dishonored

Answer 25

Holder in due course

Question 26

A creditor’s legal right or interest in another’s property, usually lasting until satisfaction of the specific debt or duty that the lien secures

Answer 26

Lien

Question 27

The body of federal law that allows debtors who are unable to pay their creditors to divide their assets among their creditors to discharge the debts

Answer 27

Bankruptcy law