Chapter 3: contract and agency

Question 1

what is contract law

Answer 1

contract of bargins- relationship between two parties
insurance contract is an agreement, enforable by law

Question 2

valid contract

Answer 2

offer and acceptance+ consideration

Question 3

intention to create legal relations:

Answer 3

business contracts intended to be binding in law

Question 4

capacity to contract

Answer 4

ability of someone to enter into legally binding relationship

Question 5

consensus ad idem

Answer 5

meeting of minds- clear about what is being covered- same risk

Question 6

legality of purpose

Answer 6

if insured tries to take out policy on stolen goods

Question 7

possibility of performance

Answer 7

action must be complete- it can’t be impossible to do so

Question 8

certainty of terms

Answer 8

policy wordings must be clear- if it is vague there may be no contract

Question 9

parties to contract

Answer 9

privity of contract- contracts are private, only parties named have rights under them

Question 10

evidence of contract

Answer 10

contract itself lies in promise each side makes- insured pay premiums and insurers provide insurance

Question 11

void ab initio-

Answer 11

contract may be invalid, if documents are not in writing to insured

Question 12

offer and acceptance

Answer 12

contract comes into existenve when one party makes an offer which the other accepts unconditionally

Question 13

uncondotional acceptance

Answer 13

unaltered terms of offer- unconditional
to be effective, acceptance must be final and unqualified agreement to the offer

Question 14

conditional acceptance

Answer 14

if new terms introduced- acceptance becomes new offer-

Question 15

postal acceptance

Answer 15

contract is accepted once postal letter has been sent

Question 16

offer and acceptance in practice

Answer 16

some insurers allow agents to accept liability on their behalf before formalities settled

Question 17

consideration

Answer 17

consideration is each persons side of bargain which supports the contract- payment
Parties can exchange promises to perform certain acts in future or promise to do so- consideration