CPCU 530 Chapter 4 Test Questions with Correct Answers

CPCU 530 Chapter 4 Test Questions with Correct Answers Statutes of Fraud - Answer-A collection of laws that help prevent parties from becoming involved in fraudulently formed contracts. COD (Collect on Delivery) - Answer-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 payment. Implied Warranty of Merchantability - Answer-An implied warranty that a product is fit for the ordinary purpose for which it is used. Implied Warranty of Title - Answer-An implied promise in a contract for the sale of goods that the seller has legal ownership of goods and has no knowledge of any security interest or other lien on the goods other than those disclosed to the buyer. Primary Liability - Answer-The absolute obligation to pay a negotiable instrument according to its terms. Secondary Liability - Answer-The obligation to pay a negotiable instrument only if someone else refuses to pay or to accept the instrument. Personal Defense - Answer-A claim to an instrument by any person and any defense that would be effective in a simple contract transaction. Ex: Lack or failure of consideration, misrepresentation, fraud Real Defense - Answer-A defense of an obligor of a negotiable instrument that may be asserted even against a holder in due course. Ex: incapacity, duress, illegality, and discharge in bankruptcy Warehouse Receipt - Answer-A legal document that provides title to the goods in storage and assures delivery to the holder of the receipt