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CPCU 530 Homework 2Business Law for the Insurance Professional
Donna M. Kesot, CPCU for American Institutes for Chartered Property & Casualty Underwriters
February 2013Homework
Consideration—Activities 2
Chapter 2
Educational Objective (EO) -- Types of ContractsContrast the following types of contracts considering these elements, Contract, promisor, promisee, privity of contract, third party beneficiary, breach of contract:
Bilateral and unilateral Executed and executory Express and implied Void and voidable
Quiz Yourself (cover Answer column and see how you do, add an example)Types of Contracts Answers Examples will vary1. Bilateral contract
Educational Objective (EO) -- Requirements of an OfferDescribe the requirements of a valid offer.
1. Why is an offer necessary for an enforceable contract?2. What are the three requirements for a valid offer?3. What types of communications are not offers?4. Give some examples of definite terms in an offer.5. What factors help determine whether an offer is binding?
Educational Objective (EO) -- Requirements of a Valid AcceptanceDescribe the requirements of a valid acceptance.
• Acceptance made by the offeree.• Unconditional and unequivocal.• Communicate the acceptance to the offeror
Educational Objective (EO) -- Capacity to ContractDescribe the circumstances in which each of the following has the capacity to contract:
Minor Insane person Intoxicated person Artificial entity
Describing Consideration Types and Contract Enforceability Write a description of each type of consideration (or exception to consideration requirement) below, and indicate whether it is sufficient for an enforceable contract.
Educational Objective (EO) -- Third Party Contractual Rights
Describe the circumstances in which a third party would have enforceable rights under a contract.
Describing Third Party Contractual Rights
Third parties generally do not have rights under a contract, but the exceptions are when a contract is assigned, or for a third party beneficiary contract.
Which types of rights can be assigned to a third person? What are some examples of contract rights that can’t be assigned? What type of assignment needs to be in writing, and why? Who can benefit from third-party beneficiary contracts? Do any of these parties
have enforceable rights? What rights are given to a beneficiary under a contract?
Educational Objective (EO) -- Termination of a Contract
Describe the various ways in which the contractual obligations of the parties to a contract can be terminated.
Educational Objective (EO) -- Contracts Case Study
Given a case, determine whether a described contract would be legally enforceable.
Determining the Enforceability of a Contract
In order to determine whether a contract is legally enforceable, you must establish two things:
• That a valid contract was formed, and
• That the contract is enforceable.
If a legally enforceable contract is breached, then the injured party can seek remedies and other options.
If necessary, review the Le Garde´Manger case facts in the course materials.
Determining the
Enforceability of a Contract
Answers
1. Assume that Jake and Marta have just finished signing the proposal that Paul submitted and have given him a check for $5,000 as a deposit payment. It is at this point that they discover that Paul is an unlicensed contractor. Is the contract enforceable? Why or why not?
2. Jake and Marta received a fourth proposal from a contractor who is a friend of theirs. He offered to construct the deck in exchange for “$500 and a few meals.” Jake and Marta like his proposal best, sign it, and give him the $500 deposit. Is this an enforceable contract? Why or why not?
Develop a scenario that illustrates how their assigned topic affects an insurance contract. Specifically, the scenario should show the impact on creating a contract, or avoidance of a contract.
Educational Objective (EO) -- Waiver, Estoppel, and Election
Explain how the following concepts legally prevent an insurer from reviving a defense it has forfeited earlier:
• Waiver
• Estoppel
• Election
______________________________________________________________________ What types of rights and privileges are typically waived by insurers? Give some examples of waivers precluding an insurer from denying a claim or
suit. How is estoppel different from waiver? Give examples of election by an insurer, and an insured.
Educational Objective (EO) -- Nonwaiver Agreements and Reservation of Rights Letters
Explain how nonwaiver agreements and reservation of rights letters affect insurers’ and insureds’ rights.
Explaining How Nonwaiver Agreements and Reservation of Rights Letters
Affect Rights
What is a nonwaiver agreement? What is a reservation of rights letter? Why does an insurer use a reservation of rights letter? What is the benefit to
the insurer? Why does an insurer use a nonwaiver agreement? What should happen if the insured refuses to sign the nonwaiver agreement? What are the requirements for nonwaiver agreements and reservation of