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RIBO Insurance Course Practice Questions Week 1.5.
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RIBO Insurance Course Practice Questions Week 1.5.
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RIBO Insurance Course PracticeQuestions Week 1.5
What are the five (5) elements of a contract in common law provinces?
Select one:
a. Capacity to contract; Genuine intention; Ability to complete; Legality of purpose; and
Termination
b. Agreement; Consideration; Legality of purpose; Written approval; and Completion
c. Capacity to contract; Consideration; Genuine intention; Written approval; and
Completion
d. Agreement; Consideration; Capacity to contract; Genuine intention; and Legality of
purpose - ANS-d. Agreement; Consideration; Capacity to contract; Genuine intention;
and Legality of purpose. Under common law, the following conditions must exist for a
valid contract—Agreement (offer and acceptance); Genuine intentions; Consideration;
Capacity to contract; and Legality of purpose.
How is a meeting of the minds demonstrated in contract law?
Select one:
a. Genuine intention—both parties intend to create a legally binding contract
b. Capacity to Contract—both parties have legal capacity to enter into a contract
c. Offer and Acceptance—offer communicated by one party is accepted by the other
party
d. Consideration—Both parties intend to be bound by the contract - ANS-c. Offer and
Acceptance—offer communicated by one party is accepted by the other party. The first
essential element in a legally binding contract is the existence of an agreement or a
"meeting of the minds", which requires an offer made (communicated) by one party and
an acceptance of that offer by another party.
What is a contract that is treated by law as though it never existed called?
Select one:
a. Revoked contract
b. Void contract
c. Contract without agreement
,d. Contract without consideration - ANS-b. Void contract. The law treats a void contract
as if it never existed. The mistake that led to the contract being void must be of a
serious nature and therefore material to the contract.
What element is commonly missing when trying to establish a legal contract in domestic
situations?
Select one:
a. Legality of purpose
b. Consideration
c. Genuine intention
d. Legal capacity - ANS-c. Genuine intention. In many domestic agreements, a legal
binding contract is not intended. Therefore, there is no contract even if the other four
elements—Agreement, Capacity, Legal object, and Consideration are present.
What are the three (3) additional requirements of insurance contracts?
Select one:
a. Utmost good faith; Subrogation; Materiality
b. Disclosure; Utmost good faith; Indemnity
c. Materiality; Subrogation; Indemnity
d. Insurable interest; Indemnity; Utmost good faith - ANS-d. Insurable interest;
Indemnity; Utmost good faith. To be valid, insurance contracts must contain the
essential elements of common law contracts PLUS insurable interest, indemnity and
utmost good faith. The absence of one of these three additional elements may make the
insurance contract null and void.
What legal relationship does the law set up between bailees and property belonging to
other people?
Select one:
a. The law makes customers responsible for the property of bailees
b. The law makes bailees responsible for damage to property of others that they hold in
their possession
c. The law releases bailees of any responsibility for the property of others in their
possession
d. The law requires bailees to obtain consent forms to work on the customers' property
in their possession - ANS-b. The law makes bailees responsible for damage to property
of others that they hold in their possession. The law enforces that bailees who have
property of others in their possession, such as dry cleaners, have an insurable interest
, due to potential responsibility to make good any loss or damage to property in their
care.
What is it called when individuals have an insurable interest in their own potential
responsibility?
Select one:
a. Indemnity
b. Legal Capacity
c. Utmost Good Faith
d. Legal Liability - ANS-d. Legal Liability. Legal liability to pay damages to others for
injuries they cause to them or damage they do to the property of others. For example,
tenants are responsible for damages arising out of their use of the premises.
What is the term used to describe those who stand in such a legal relationship to
property that they would be financially prejudiced by its loss or damage and financially
benefited by its continued existence?
Select one:
a. Insurable Interest: Liability
b. Insurable interest: property
c. Indemnity
d. General interest - ANS-b. Insurable interest: property. Insurable interest in property is
used to describe individuals who have a legal relationship to property and would be
financially prejudiced by its loss or damage or benefited by its continued existence.
Which statement best describes the principle of indemnity?
Select one:
a. Place people back into the same financial position that they were in before the loss
b. Salvage items and offer a cash settlement for fifty percent of the value of any lost
articles
c. Repair all damage and include a thirty percent increase to counteract inflation
d. Replace all lost or damaged articles with better quality products where possible -
ANS-a. Place people back into the same financial position that they were in before the
loss. The principle of indemnity provides that insureds are to collect the amount of their
financial loss—no more and no less (i.e. the insured cannot benefit from the loss).
What method of calculating indemnity considers the value of an equivalent piece of
property of the same age, condition, and wear and tear as the lost property?
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