CPCU 530 Practice Test Questions with Correct Answers

Daniel offers a ride to Lily, a ten-year-old, and takes her to his house where he locks her in his cellar and demands money from Lily's parents to secure her return. The parents agree to pay and Lily is returned, but Daniel never receives the money. He sues Lily's parents for breach of contract. Which one of the following explains why Daniel's contract with Lily's parents is not legally binding? It lacks a legal purpose Maria owns a commercial building and places insurance with Bastion Insurance. Because the annual premium is high, and cash is tight, Maria decides to enter into a premium finance agreement with Finance Co. ("Finance"). Under the premium finance agreement, Finance pays Bastion the full annual premium and Maria pays Finance a monthly amount for the premium, a fee and interest. At the midpoint of the policy year, which one of the following best describes Maria's premium finance agreement with Finance? A bilateral contract In February, Ann contracts with Mahdi to deliver clean garden top soil for $30 a cubic yard to Mahdi's farm in Pennsylvania. No time for delivery is stated in their contract but the parties understand that Mahdi wants to use the soil for this year's planting season. In March, Ann delivers garden soil that is contaminated and Mahdi refuses to pay because he believes Ann breached their agreement. Which one of the following best describes how a court would rule on Mahdi's claim that Ann breached their agreement? The court would find for Mahdi because Ann's goods are non-conforming. Tile Roofing is a contractor specializing in roof installation for homes and commercial accounts. Recently several Tile Roofing workers have fallen and suffered significant injuries because the workers do not have any safety harnesses preventing falls. Under which one of the following employee welfare laws would Tile Roofing potentially be subject to civil or criminal penalties? Occupational Safety and Health Act Tool Corporation has operated successfully for decades, but in recent years stiff price competition from overseas suppliers and a lack of skilled labor at affordable prices have made the company unprofitable. Tool Corporation has incurred substantial debt to keep the operation running and save jobs, but they can no longer access bank financing. Tool Corporation believes that it can return to profitability if it reorganizes. Under which chapter of the bankruptcy code should Tool Corporation file? Chapter 11 Diego and Georgia meet in a bar and enjoy cocktails together. Diego has many more drinks than Georgia and is stumbling and slurring his speech. Sensing an opportunity, Georgia proposes that Diego sell her his expensive Swiss wristwatch for a mere $100 and Diego agrees. The next day, Georgia appears at Diego's office with $100 asking for the wristwatch. Which one of the following arguments is best for Diego to avoid the contract? Diego lacked capacity to enter into a contract because he was inebriated