Welcome to Assignment 2
This assignment introduces contract law — the backbone of every insurance policy. You will learn what makes a contract legally enforceable, the different types of contracts, how offers and acceptances work, and who has the legal capacity to enter a contract. Since every insurance policy IS a contract, mastering these concepts is essential for the entire CPCU 530 course.
Exam Alert!
Key exam topics: the four elements of a contract (ACLC), the mailbox rule, void vs. voidable contracts, counteroffers killing the original offer, and the rule that unlicensed insurers cannot avoid their contracts.
What You Will Learn
1. The four elements required for a legally enforceable contract
2. How to classify contracts: bilateral/unilateral, executed/executory, express/implied, void/voidable
3. How offers and acceptances work (and what kills them)
4. The mailbox rule and UCC Battle of the Forms
5. Who has capacity to contract — and who does not
6. Special capacity rules for insurers, producers, and insureds
Assignment Parts
Contract Formation & Types of Contracts
The four elements every contract needs, plus how to classify contracts: bilateral vs. unilateral, executed vs. executory, express vs. implied, void vs. voidable.
Offer, Acceptance & Capacity to Contract
How offers and acceptances create agreements, the mailbox rule, UCC Battle of the Forms, and capacity rules for minors, insane/intoxicated persons, corporations, and insurers.
Quick Reference Summary
4 Elements
Agreement + Capacity + Legal Purpose + Consideration (ACLC).
Bilateral vs. Unilateral
Both sides promise vs. only one side promises. Insurance = unilateral.
Void vs. Voidable
Void = never was a contract. Voidable = valid until the protected party cancels.
Mailbox Rule
Acceptance effective when SENT. Revocation effective when RECEIVED.
Counteroffers
A counteroffer kills the original offer AND creates a new one.
Unlicensed Insurers
Cannot avoid their own contracts. Policies enforceable against them.