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