Chapter 4 - New Questions

Question 1

In the UK, can a minor act as an agent?

Answer 1

Yes, a minor can act as an agent and bring about contracts for others.

Question 2

What condition must be met for an act to be ratified by a principal?

Answer 2

The agent must have made it clear that they were acting on behalf of the principal.

Question 3

If an agent sells a principal’s car without authorization and the principal later ratifies the sale, what can the principal do if the buyer fails to complete the purchase?

Answer 3

The agent can sue the buyer for breach of contract.

Question 4

What does it mean that ratification ‘relates back’ to the date of the agent’s original act?

Answer 4

Ratification makes the original act valid as of the date it was done.

Question 5

Which of the following acts cannot be ratified under the doctrine of ratification?

Answer 5

An act that is void or illegal.

Question 6

What is the legal implication if an agent, acting on behalf of the insurer, fails to disclose material information?

Answer 6

The insurer is assumed to know the true facts and cannot avoid the policy.

Question 7

Which of the following situations might confirm that an agent is acting for the consumer under CIDRA 2012?

Answer 7

The agent undertakes to give impartial advice to the consumer.

Question 8

In the case of North & South Trust Co. v. Berkeley (1970), the broker was considered an agent of whom during the claim settlement negotiation?

Answer 8

The insurer.

Question 9

If a broker obtains insurance coverage that does not meet the insured’s instructions, what is the broker’s duty?

Answer 9

To inform the insured immediately if full coverage as requested cannot be obtained.

Question 10

In the context of insurance, who is the ‘producing broker’ in the relationship between an overseas broker and a London broker?

Answer 10

The overseas broker who has a direct agency agreement with the insured.

Question 11

Who is held liable to the insured if the placing broker in the London market is negligent?

Answer 11

The producing broker.

Question 12

What type of liability does the producing broker hold if the placing broker is negligent?

Answer 12

Direct liability to the insured.

Question 13

What is the primary basis of an agent’s relationship with their principal?

Answer 13

Fiduciary duties, including good faith

Question 14

In which field is specific disclosure of commission often required by law?

Answer 14

Life insurance

Question 15

Under the Marine Insurance Act 1906, who is personally liable for the payment of a premium in marine insurance?

Answer 15

The broker

Question 16

In what situation can the principal sue the agent in tort?

Answer 16

If the agent refuses to return the principal’s property.

Question 17

What can the principal sue for if the agent fails to disclose full financial details of their agency dealings?

Answer 17

Sue for an account.

Question 18

According to the Insurance Act 2015, what is the insured assumed to know if they are an individual?

Answer 18

What their agents responsible for arranging insurance know.

Question 19

What is commonly done in an insurance agency or broking firm regarding commission and fees?

Answer 19

The agent or broker often returns the commission to the insurer and charges a fee, with the insured ultimately paying the agent.

Question 20

What are the two types of lien?

Answer 20

Particular lien and general lien

Question 21

What does implied actual authority allow an agent to do?

Answer 21

Act beyond the principal’s instructions if necessary for the agent’s personal gain.

Question 22

In what situation would an agent have no express actual authority but only implied actual authority?

Answer 22

When the agency is created by implied agreement.

Question 23

What should a principal do to end both the actual and apparent authority of an agent?

Answer 23

Inform third parties who have previously dealt with the agent.

Question 24

Which of the following is an exception where an agent might still be liable when acting for a disclosed principal?

Answer 24

The agent signs a deed.

Question 25

What happens if a principal owes money to a third party but pays the agent, and the agent does not pass on the payment?

Answer 25

The principal is still liable to the third party.

Question 26

If an agent becomes insane, under what conditions does the agency end?

Answer 26

The agency ends if the agent is unable to carry out their duties.

Question 27

What is an example of frustration in an agency contract?

Answer 27

The property (e.g., a house) to be sold by the agent is destroyed.

Question 28

What are the consequences for the principal and agent when an agency is terminated?

Answer 28

Vested rights like earned commission or indemnity for past expenses remain.

Question 29

How does termination of an agency affect the third party dealing with the agent?

Answer 29

The agent’s apparent authority may still bind the principal until the third party is notified.