1. Donna M. Kesot, CPCU ©February 19, 2013

2. Essential Breach of Contract
Estoppel Review
Elements Contract Formation
10 10 10 10 10
20 20 20 20 20
30 30 30 30 30
40 40 40 40 40
50 50 50 50 50

3. Category 1 questions follow

4. Question
Name 4 Essential Elements of a Contract

5. Answer
1. Agreement (an offer & acceptance)
2. Capacity to contract
3. Consideration
4. Legal Purpose
Without ALL four, the contract is not legally enforceable

6. Question
3 Elements of an Offer

7. Answer
1. Intent to contract (conveyed with words of promise)
2. Definite Terms (parties, subject matter, price, time of
performance)
3. Communication with other party (knowledge at
completed performance)

8. Question
5 Essential Elements of duration & termination

9. Answer
1. Lapse of time
2. Operation of Law (e.g. the subject of the contract becomes
illegal after the offer, or is destroyed before acceptance)
3. Offeree’s Rejection
4. Counteroffers
5. Offeror’s Revocation (prior to acceptance)
Once a contract arises, death/insanity does not terminate it unless
it’s a personal service of the deceased/insane)

10. Question
6 Characteristics of Insurance Contracts

11. Answer 1. Conditional (e.g. payment conditioned on a covered
loss)
2. Fortuitous & involve unequal amounts
3. Utmost good faith
4. Adhesion
5. Indemnity
6. Nontransferable (without insurer’s written
concent

12. Question
5 Essential Elents for an Insurance Contract

13. Answer
1. Type of Coverage
2. Object/Premises to be Insured
3. Amount of Insurance
4. The Insured’s Name (not the carrier)
5. Duration of Coverage

14. Category 2 questions follow

15. Question
What is the doctrine of Estoppel?

16. Answer Estoppel is a legal principle that prohibits a party
from asserting a claim or right that is inconsistent
with that party’s past statement or conduct on
which another party has detrimentally relied.
Led down the garden path either before or after
the written contract

17. Question
What 3 things trigger estoppel in Insurance Law?

18. Answer
1. False representation of a material fact
2. Reasonable reliance on the representation
3. Resulting in injury or detriment to the insured

19. Question
How does waiver, estoppel, & election prevent the
insurer from reviving a defense forfeited earlier?

20. Answer 1. Waiver is intentional relinquishment of a known right in
an existing contract
2. Estoppel is a legal principle that prohibits a party from
asserting a claim or right that is inconsistent with hat
party’s past statement or conduct on which another
party has detrimentally relied.
3. Election is a voluntary act of choosing between two
alternative rights
Give Examples

21. Question
What is the Parol Evidence Rule?

22. Answer
1. Parol evidence rule: In order to waive a right
the contract must be in force
2. Prohibits oral evidence from being introduced
into evidence

23. Question
Describe 3 ways estoppel differs from waiver.

24. Answer 1. Waiver is contractual in nature and rests upon
agreement between parties. Estoppel is equitable in
nature and arises from false misrepresentation
2. Waiver gives effect to the waiving party’s intention.
Estoppel defeats the inequitable intent of the
estopped party
3. The parol evidence rule applies to waiver but not to
estoppel.

25. Category 3 questions follow

26. Question
Repudiation v Anticipatory Breach

27. Answer
Repudiation: A party’s refusal to meet obligations
under a contract at time of performance
Anticipatory Beach: A party’s unequivocal
indication before performance is due that she will
not perform when performance is due

28. Question
Material v Minor Breach

29. Answer Material Breach: Violation of the agreement that would
justify an owner’s termination of the contract
Material v Minor Breach is a matter of degree
• Extent of breaching party’s performance
• Willfulness of the breach
• Extent to which the non-breaching part obtained
benefits and can receive compensation

30. Question
Name two equitable remedies

31. Answer
1. Specific Performance
2. Injunction

32. Question
Bad Faith

33. Answer
Intentional or reckless act, extreme or outrageous
in nature causing severe emotional distress, that
results in physical injury
Extracontractual Damages can be awarded for this
breach

34. Question
Explain each of the 5 types of damages awarded
for breach of contract

35. Answer 1. Compensatory Damages (indemnify for actual harm)
2. Consequential Damages (indemnify for indirect loss, foreseeable)
3. Punitive or Exemplary Damages (to punish recklessness, maliciousness,
deceitfulness, to make an example)
4. Extracontractual Damages
--breach of insurer’s duty of good faith
--Intentional infiction of emotional distress or extreme & outrageous
conduct
5. Liquidated Damages (reasonable estimate of damages, in contract)

36. Category 4 questions follow

37. Question
3 elements that make an offer valid

38. Answer
A valid offer requires:
1. Intent to contract
2. Definite terms
3. Communication to offeree
Acceptance requires a valid offer & valid acceptance

39. Question
Novation

40. Answer The substitution of a 3 rd party for one of the
original parties to a contract, releasing the original
party from rights and obligations under the
contract

41. Question
A valid acceptance requires 3 things

42. Answer
1. It must be made by the offeree
2. It must be unconditional and unequivocal
3. The offeree must communicate the acceptance
to the offeror by appropriate word or act

43. Question
Executory v Implied v Express Contracts

44. Answer Executory –not completely performed by one or
both parties
Express—terms and intentions are explicitly stated
Implied—terms and intentions are indicated by the
actions of the parties to the contract and the
surrounding circumstances.

45. Question
Void v Voidable Contracts

46. Answer Void – an agreement that never reaches contract
status, based on an unenforceable agreement (i.e.
illegal) , Not legally enforceable.
Voidable – one party can reject (avoid) based on
some circumstance surrounding the contract
execution.

47. Category 5 questions follow

48. Question
Allegation

49. Answer
A claim made in a complaint by a plainiff specifting
what the plaintiff expects to prove to obtain a
judgment against the defendant

50. Question
Answer

51. Answer A document filed in court by a defendant
responding to a plaintiff’s complaint and
explaining why the plaintiff should not win the
case.

52. Question
Interrogatories

53. Answer
Specific written questions or requests raised by
one party to a lawsuit that the opposing party
must answer in writing

54. Question
Hearsay Rule

55. Answer
The rule of evidence that prevents the admission
of out of court statements not made under oath by
a person who is unavailable to testify.

56. Question
Civil Law v Common Law

57. Answer Civil Law has a foundation of law in Europe, Latin
America, Scotland, Louisiana based on the French
Code of Napoleon. The system relies on scholarly
interpretation of their codes and constitutions, not
court decision
Common Law is based on English law and
‘precedent.’ Law developed from court cases.