Contract Terms Quiz

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What does a contract of adhesion describe?

A contract that is aleatory

A contract prepared by both parties

A contract where terms are negotiated

A contract prepared by one party with no negotiation (correct)

Who does an agent represent at the time of application?

The insured

Neither the insurer nor the insured

Both the insurer and insured

The insurer (correct)

What does an aleatory contract present?

Specified tasks for the agent

Negotiated terms

Equal exchange of value

Unequal exchange of value (correct)

What does Apparent Authority refer to?

The insurer providing the agent authority to perform unspecified tasks Signup and view all the answers

Who does a Broker represent at the time of application?

The insured Signup and view all the answers

What does the term 'Competent Party' in a contract imply?

A party that is of legal age and mentally capable Signup and view all the answers

What does 'Concealment' refer to when applying for insurance?

Failure to disclose a known material fact Signup and view all the answers

What is the basis of a 'Conditional' insurance policy?

The occurrence of an event covered by the contract Signup and view all the answers

What does 'Consideration' refer to in an insurance contract?

The amount of initial and renewal premiums and frequency of future payments Signup and view all the answers

What does the applicant provide as 'Consideration' for insurance?

A completed application and initial premium Signup and view all the answers

What is the primary responsibility of a fiduciary in the context of insurance?

To account for all premiums collected and provide sound financial advice Signup and view all the answers

What does estoppel prevent in a legal context?

A party from denying the consequences of its actions or deeds Signup and view all the answers

Which type of authority is explicitly granted to the agent by the insurer in the agency contract?

Express Authority Signup and view all the answers

What does fraud include in the context of insurance?

Deliberate knowledge of or intentional deceit to make false statements to be compensated Signup and view all the answers

What does implied authority enable the agent to do?

Carry out routine responsibilities Signup and view all the answers

What is the main goal of an indemnity contract?

To return the insured to their original financial position Signup and view all the answers

What does having an insurable interest in a loss imply?

The person has more to gain by not suffering the loss Signup and view all the answers

What is the purpose of an insurance policy?

To indemnify one party against loss from an unknown event Signup and view all the answers

What does 'Legal Purpose' mean in the context of insurance?

The contract must be legal and not in opposition to public policy Signup and view all the answers

What is a material misrepresentation in insurance?

A false statement that would influence an insurer in determining whether or not to accept the risk Signup and view all the answers