Risk Management and Liability Flashcards

An indemnification clause in a contract requires one party to:

Answer: Hold the other party harmless from specified losses or claims

An indemnification clause obligates one party to compensate or defend the other against designated losses, damages, or legal claims.

A client signs a contract waiving the right to sue a licensee for ordinary negligence. This type of clause is called a:

Answer: Exculpatory clause

An exculpatory clause attempts to release one party from liability for their own negligence, though courts may void such clauses when they are against public policy.

Which of the following best describes 'assumption of risk' as a defense?

Answer: The plaintiff voluntarily exposed themselves to a known danger

Assumption of risk is a defense asserting that the plaintiff knowingly and voluntarily accepted the risks inherent in an activity and therefore cannot recover damages.

A property manager fails to repair a broken stair railing after being notified by a tenant. A visitor is subsequently injured. The property manager's liability is most likely based on:

Answer: Negligence — failure to act with reasonable care after notice

Once a property manager receives notice of a dangerous condition and fails to remedy it, they breach their duty of reasonable care, establishing negligence liability.

The 'but-for' test is used in tort law to establish:

Answer: Actual causation between the defendant's act and the plaintiff's injury

The but-for test determines actual cause: but for the defendant's negligent act, the plaintiff's injury would not have occurred.

A licensee's general liability insurance typically covers all of the following EXCEPT:

Answer: Professional errors and omissions

General liability insurance covers third-party bodily injury, property damage, and personal/advertising injury, but professional errors and omissions require a separate E&O policy.

Under comparative negligence principles, a plaintiff who is found 30% at fault in a $100,000 claim would recover:

Answer: $70,000

Under comparative negligence, a plaintiff's recovery is reduced by their percentage of fault; 30% fault reduces a $100,000 award to $70,000.