Principles of Contract and Insurance Law Quiz

An offer is a proposal made with the intention to create a legal obligation if accepted.

Consideration is what each party to a contract must receive to make the contract legally binding.

The statute of frauds mandates that certain types of contracts must be in writing to be enforceable.

Subrogation allows an insurer to step into the shoes of the insured to recover from third parties.

The parole evidence rule limits the use of extrinsic evidence to alter the terms of a written contract.

Underwriting involves evaluating risks to determine if they meet the insurer's standards and pricing accordingly.

Privity of contract means that only the parties involved in the contract can enforce its terms or be bound by them.

Anticipatory repudiation occurs when one party explicitly refuses to fulfill contractual obligations before they are due.

In a unilateral contract, one party makes a promise that the other can accept only through performance, whereas in a bilateral contract, both parties exchange promises.

Concurrent causation refers to the scenario where multiple factors contribute to a single loss, and coverage may apply if at least one cause is covered.

Caveat emptor means purchasers must perform their due diligence and are responsible for the quality and condition of what they buy.

Rescission is the termination of an insurance policy from its inception, often due to the insured's misrepresentation or fraud.

Uberrimae fidei requires both parties to an insurance contract to act with complete honesty and disclosure.

Force majeure refers to uncontrollable events that may relieve parties from fulfilling their contractual duties.

An indemnity clause outlines the extent of one party's responsibility to compensate the other for losses or damages.

Warranties are assurances about product quality or performance, while representations are factual statements influencing contract formation.

Insurance brokers act as intermediaries between insurance companies and clients, helping clients find suitable coverage.

Utmost good faith mandates full and honest disclosure of all material facts by both parties to an insurance contract.

Efficient proximate cause identifies the primary event that triggers coverage, even if other contributing factors are present.

Utmost good faith requires both the insurer and insured to act honestly and fairly in all dealings.

Substantial performance occurs when a party to a contract fulfills most of its obligations, though not necessarily perfectly.

Insurance adjusters evaluate claims, gathering information and determining the value of losses to facilitate fair settlements.

The parol evidence rule restricts the use of extrinsic evidence to modify or contradict terms of a written contract when it's intended to be a complete and final expression of the agreement.

Coinsurance mandates that the insured maintain coverage for a certain percentage of the property's value to avoid a penalty in the event of a claim.

Prima facie evidence is accepted as true unless proven otherwise and can establish a fact or case in the absence of contrary evidence.