Chapter 3 Questions

Question 1

If an employee’s employment contract precludes them from working for a rival firm or setting up a competing business of their own, this is known as a

Answer 1

restraint of trade

Question 2

A contract is defined as

Answer 2

a legally binding agreement

Question 3

If an individual signs an insurance contract without reading the full details of the contract, the general principle is that they are

Answer 3

fully bound by the terms of the contract

Question 4

For a statutory assignment to take place under the Policies of Assurance Act 1867, what must occur for there to be a legal assignment?

Answer 4

A written notice of assignment must be given to the insurer at its principal place of business.

Question 5

It is possible to cancel a debt by mutual agreement and to create a new debt in its place. What is this known as?

Answer 5

Novation

Question 6

what is an invitation to treat

Answer 6

a statement made when negotiations are still in progress, and not an offer
it is effectively an invitation to make an offer

Question 7

examples of contracts which must be by deed

Answer 7

a transfer of title to land, a transfer of a british ship or shares in a british ship

Question 8

what are necessaries

Answer 8

basic products and services of everyday life

Question 9

what happens if a warranty is broken

Answer 9

the injured party has a right to claim damages but not, in general, to terminate the contract

Question 10

what happens if a condition is broken

Answer 10

the victim has a right to claim damages and terminate the contract

Question 11

when may a contract become frustrated

Answer 11

if after the contract is concluded it becomes illegal, futile or impossible to perform

Question 12

how may a contract be discharged

Answer 12

performance, breach, agreement, frustration

Question 13

what is assignment of the benefit of a contract

Answer 13

the entire contract is not assigned but merely the benefit
no change in the subject matter of the contract

Question 14

under what circumstances might there be an equitable assignment of a life insurance
policy

Answer 14

this has always been possible, may be done by handling the policy to another, provided the intention to assign is clear

Question 15

what is the main disadvantage to the assignee of a life insurance policy if
the assignment is only an equitable one

Answer 15

the assignee cannot enforce the policy in their own name, they have to join the assignor in the action either as co-claimant or co-defendant