Chapter 3 Flashcards
Offer and acceptance
a contract comes into existence when one party makes an offer which the other accepts
unconditionally
Consideration
contracts must be supported by consideration to be valid Defined in currie v. misa
Fulfilment
An insurance would mean a total loss of the subject matter
Agency
is one who is authorised by a principal to bring that principal into a contractual relationship with another third party the most usual way creating a relationship between principal and agent is by consent also known as an agency agreement. Insurers will issues a term of business agreement to each agent starting the terms and conditions of the appointed
Agency by necessity
arises where a person is entrusted with someone else good and it becomes necessity to
acct in a certain way in way order to preserve the property in an emergency
Ratifications
Refers to a situation where an agent act without authority, but the principal accepts the act as
having been done by the agency on their behal
Agency by consent
The most usual way of creating a relationship between principal and agent is by consent and
also known as an agency by agreement
Accountability
an agent must account to their principal for all money they receive on their behalf and must
keep a proper record of all transactions
Actual authority
may be express or implied
Express authority
arises from the terms of an agency agreement, which may be oral or in writing
Implied authority
may be of two kinds. If the agent has to undertake a certain action in order to carry out
express instructions
An agent
may be terminated by mutual consent, by either party or by the death, bankruptcy or insanity of
either party
Terms of business agreement (TOBA’S
should be clear and succinct, reflect the business relationship, define and
allocate responsibilities and rights, ensure compliance with regulatory or statutory rules
Good faith
relationship with their principal is one of trust. It follows that they must not allow their own
interest to conflict with their duties towards their principa
Under the insurance act 2015
an insurer may elect to contract in response to a fraudulent act
A consumer
Has a right to cancel without a penalty and without a reason, most insurance policies purchased at the distance as long as they do so within 30 days for a payment protection policy or 14 days for any other type of policy
What can an insurer do in the event of a fraudulent claim?
- Not liable for the claim
- Recover any amounts already paid for the claim
- Can choose to cancel the contract from the date of the fraudulent act with no return of premium
What happens in a breach of warranty?
The insurer is discharged from liability from the date of the breach until it is remedied
What is a warranty?
A term in an insurance contract which must be complied with by the insured
What does “ab initio” refer to?
Avoiding the contract entirely and setting it aside “from the beginning” usually due to mis-representation or non-disclosure
What are the insurer’s rights of cancellation?
Depends on the policy. Most have a cancellation condition allowing the insurer to cancel providing they send a letter to the insured’s last known address providing 14 days of notice of cancellation. The period of notice is set by the insurer. They then owe a pro rata return premium representing the risk not covered
What is the legal definition of consideration?
Some right, interest, profit or benefit accruing to one party, or some forebearance, detriment, loss or responsibility given, suffered, or undertaken by the other
What are the rules about postal acceptance?
Bonus points for naming the precedent case
If the parties have agreed to communicate by post the acceptance is complete at the point when the letter is posted, even if it is delayed, lost, and never received by the other party
Household Fire Insurance Co v Grant (1879
Does an offer and conditional acceptance form a contract?
Bonus points for naming the precedent case
Not unless accepted by the initial proposer - the conditional acceptance becomes a new offer (a counter offer) and rejects the original offer
Hyde v Wrench (1840
What are the two types of acceptance?
Unconditional and conditional
An agreement must satisfy what 2 criteria to be considered a valid and enforceable contract?
(There are others but they are not included in the syllabus
Offer & Acceptance
Consideration
What is apparent
It is unlikely that a third party will be aware of the extent of an agent agreement.
Duties of a principal
Remuneration
Indemnity
Marine Insurance act 1906
A warranty is a term is a insurance contract which is according to the marine insurance act must be exactly and literally complied with by the insured whether material to the risk or not
What are the duties of an agent
Obedience Personal performance Due care ans skill Good faith Accountability
