Insurance Law Flashcards

Question

What is Distinguishing?

Answer 1

This occurs when a court declines to follow a previous decision on the grounds that there are important points of difference in the case which has gone before it.

Answer 2

1) It provides certainty 2) The system allows for the possibility of development and growth. 3) The system of precedent gives English law a wealth of detailed practical rulings.

Answer 3

1) Once a rule has been laid down as binding it is not easy to change - This creates rigidity in the system. 2) The bulk and complexity of case law make it difficult to navigate. 3) The principles of law contained in some decisions is sometimes obscure.

Answer 4

1) Cases in which there is a dispute between the insurance company and the policyholder. 2)Disputes between insurer themselves. 3) Cases in which insurance companies are seeking to defend their own policyholders, who are themselves being sued for compensation by third parties.

Answer 5

1) Having three separate tracks for cases, depending on their value and complexity. 2) Encouraging the use of alternative dispute resolution. 3) Giving judges more responsibility for managering cases. 4) More use of information technology. 5) Simplifying documents and procedures and having a single set of rules for proceeding in both the High court and County court. 6) Shorter timetables for cases to reach court and for the length of the trails

Answer 6

1) Small claims track - This is normally used for disputes up to £10,000, except for personal injury cases and housing disrepair cases, where the limit is usually £1,000. 2) Fast track - This is used for straightforward disputes where the financial value is not more than £25,00. 3) Multi-track - This is used for disputes which are neither small claims not have been allocated to the fast track. It is for cases, where the financial value exceeds £25,000, or the trailer is likely to last longer then one day.

Answer 7

1)Council - This body has the greatest legislative power. 2) Commission - Each member state is represented by one Commissioner who has the power to initiate legislation. 3) European Parliament - This has supervisory powers, but its legislative powers are limited and it has little or no formal control over delegated legislation passed by the commission. 4) Court of Justice - The ultimate of appeal on matters of European law.

Answer 8

1) The Treaties - best regarded as the "constitution" of Europe, setting out the basic framework and fundamental principles of European Law. 2) Regulations - These are Laws made by the Council or Commission. They are automatically binding in their entirety on all members states without any action by national governments 3) Directives - These are binding on member states. However the law contained in th Directive is left to each Member of state. 4) Decisions - These have no general application and are binding only upon those to whom they are addressed. 5) Recommendations and Opinions - these have no binding force and are advisory only

Answer 9

1) Damages -based agreements - Lawyers will now be able to conduct litigation in return for a share of damages, but the defendant will only be liable for costs only on a conventional basis.; the claimant will have to pay any shortfall out of damages. 2) Conditional fee agreements/ after the event insurance - These are no longer recoverable from the losing party where arrangements are entered into or after 1 April 2013.

Answer 10

personal injury - 25% Employment - 35% All other claims - 50%.

Answer 11

These can be defined as the lawful characteristics and qualities of an entity. It includes legal rights and duties, the capacity to enter into contract and to be otherwise subject to the requirements of the law.

Answer 12

1) Natural persons - This is all human beings. This type of legal personality beings at birth and ends at death. 2) Juristic persons (corporations)

Answer 13

1) Corporations Soles - This is a legal person representing an official position which will be occupied by a series of different people. 2) Corporations aggregate - A legal person consisting of a number of people.

Answer 14

1) Chartered corporations by Royal Charater 2) Statutory corporations by private act of parliament. 3) Registered corporations under the companies act.

Answer 15

Groups of people which have not been incorporated in the same way as corporations. They could be: 1) Small social clubs 2) Small businesses set up as partnership. 3) Trade Unions with memberships of a million or more. They are treated like unincorporated associations, and thus not as separate legal entities.

Answer 16

Tortious liability arises from the breach of a duty primarily fixed by law: such duty is towards persons generally and its breach is redressable by an action for unliquidated damages

Answer 17

Damages mean financial compensation. Unliquidated means that the amount of damages is not fixed in advance, but is decided by the court, according to the seriousness of the injury which has been caused.

Answer 18

In most cases an action in tort will succeed only where the claimant has suffered some form of injury, damage or loss. However, in some cases a tort may be actionable per se (actionable in itself). Meaning that the claimant does not have to prove that they have suffered loss or damage, only that a tort has been committed.

Answer 19

These require for intention on the part of the defendant to commit tortious acts.

Answer 20

There is no requirement for intentional conduct but negligence or other fault is necessary if liability is to arise.

Answer 21

A tort causes when someone's action was neither international or negligent. Also known as a "no-fault liability"

Answer 22

Yes there can be.

Answer 23

Malice is not relevant in the law of torts. Therefore because of the above even when a person who acts wit the very best of intentions in particular circumstances will still be held liable if the action is unlawful.

Answer 24

1) malice is an essential ingredient in one or two minor torts (Malicious prosecution and malicious falsehood) 2) In the tort of defamation certain defences are not available if there is malice. 3) In the tort of nuisance some actions which are normally reasonable will be held unreasonable if motivated by malice.

Answer 25

1) The act of the defendant must be direct: There is no liability in trespass unless the injury or harm is caused directly. 2) the act of the defendant must be intentional: There is certainly no liability in trespass for any purely accidental injury. 3) the tort us actionable per se: The claimant doesn't have to prove that they have suffered any loss or damage in order to succeed.

Answer 26

1) Assault - Any act of the defendant which directly causes the claimant to fear an attack on their person. 2) Battery - The hostile application by the defendant of physical force, even though it may by slight, to the claimant. 3) False imprisonment - Occurs when a defendant imposes total bodily restraint on the claimant, preventing them from going where they want.

Answer 27

This occurs when the defendant directly and internationally interferes with goods which are in the possession of another.

Answer 28

If the defendant deliberately deals with the goods in a way which is inconsistent with the rights of the person who owns or possesses them, they can be sued for conversion.

Answer 29

This is the direct interference with land which is in the possession of another.

Answer 30

Yes, in the sense that the defendant must have intended to go on the land in question. Therefore, if the defendant enters private land by mistake it is, nevertheless, a trespass, provided they intended to enter.

Answer 31

1) Unlawful entry onto the land of another. 2) Unlawfully remaining on the land of another 3) unlawfully placing or throwing any material object upon the land of another.

Answer 32

1) duty of care owed by the defendant to the claimant 2)A breach of that duty by the defendant (negligence) 3) Damage suffered by the claimant as a result of the negligent act. -- Only reasonably foreseeable losses that result from the negligent act will be compensated

Answer 33

A duty of case is owed to another person if it is reasonably foreseeable that they will be affected by one's acts or omissions. helps to determine if there has been negligence.

Answer 34

A breach of duty occurs when the defendant fails to do what a "reasonable" man would have done in the circumstances, or does what a reasonable man would not have done.

Answer 35

1)The magnitude of the risk is involved in the defendants activities 2) The ease with which the risk could have been eliminated or reduced and the potential costs are involved. 3) the current state of scientific or technical knowledge.

Answer 36

Liability arises when; 1) There is no 'special relationship' between the parties ( but not a contract) where it is reasonable for the claimant to rely on the advice given. 2) The giver of the advice can reasonably foresee that the advice is likely to be acted upon and that the recipient is likely to suffer if it is inaccurate. 3) The advice is, in fact, acted upon, causing loss to the claimant.

Answer 37

Usually only when the economic or financial loss accompanies physical damage, and results directly from it. Provided that the loss is not too remote. The court would be reluctant to allow claims in tort for ' pure' economic loss.

Answer 38

The first point to make is that a person who suffers bodily injury will always be allowed to recover damages for any psychiatric harm that accompanies it. However it become harder, when there has been no bodily harm: 1) claims for psychiatric illness are subject to the general principles of the law of negligence, including the usual requirements of foreseeability 2) Only those claimants who suffer a recognisable psychiatric illness will succeed. -- There is no liability for 'mere' grief or sorrow - for that which is not the symptom of an illness

Answer 39

1)Primary victims - Persons who suffer shock through fear for their own safety. 2) Persons who suffer shock through fear for the safety of others

Answer 40

1) their relationship with the immediate victim: this had to be characterised by a ‘close tie of love and affection. 2) their closeness in space or time to the incident or its immediate aftermath. 3) the means by which they learned about the accident, which had to be through their own unaided senses.

Answer 41

1) Psychiatric illness caused by stress at work. - Here, the employer may be vicariously liable, provided the harassment would be actionable in tort against the perpetrator. 2) Phobia’ cases. - Most of these are cases where employees who have been exposed to something harmful (such as asbestos) through their employer’s negligence are not yet physically ill but develop a psychiatric illness as a result of a well-founded fear for what the future may hold for them. 3) Miscellaneous cases. - These include cases where the claimant has suffered psychiatric injury as a result of witnessing damage to property; it seems that people can form an attachment to property that is just as strong as their attachment to fellow human beings

Answer 42

Public nuisance has been defined as the ‘carrying on of an activity which is likely to cause inconvenience or annoyance to the public, or a section of the public, or interference with a right common to all’.

Answer 43

A private nuisance is an unlawful interference with a person’s use or enjoyment of their land (which includes houses and buildings attached to it).

Answer 44

1) wrongfully allowing noxious (i.e. harmful) things to escape from their own property so as to interfere with the claimant’s land (such as noise, smoke, smells, vibration, damp or vermin). 2) wrongful interference with servitudes, or rights attaching to the claimant’s land (such as rights of way, rights to light or rights of support to land or buildings).

Answer 45

Damage must result. -- Meaning that This means that the interference must either cause actual physical damage to the land or at least adversely affect the claimant’s use and enjoyment of it

Answer 46

Liability is said to be ‘vicarious’ when one person is held liable for wrongs committed by another.

Answer 47

1) Is the relevant relationship one of employment or ‘akin to employment’? 2) Is the tort sufficiently closely connected with that employment or quasi employment?

Answer 48

Under the 1957 Act a ‘common duty of care’ (i.e. the same duty of care) is owed to all visitors present on the land of another, that is all persons who are not trespassers. -- before contractors, were not given the same protection then guest who had been invited in.

Answer 49

the House of Lords held, for the first time, that occupiers of land owed a duty of 'common humanity' to trespassers.

Answer 50

Accordingly, the 1984 Act extends a duty of care to trespassers and other ‘uninvited entrants’

Answer 51

1) A duty is owed only if the occupier knows or has reasonable grounds to believe that the danger exists and the trespasser has come/may come into its vicinity. 2) The risk must also be one against which the occupier may reasonably be expected to offer a trespasser some protection. 3) The only protected forms of damage are death and personal injury, with no duty in relation to property.

Answer 52

If the victim was the buyer of the goods, they will usually be able to sue the seller for breach of contract. If they are not the owner, there only legal action will be in tort.

Answer 53

1) Negligence - . Any person whose negligence caused the defect, or allowed the defect to harm the claimant can be held liable 2) Consumer Protection Act 1987 -

Answer 54

1) Libel: the defamatory statement is in a permanent form, e.g. an email, text, posting on social media or in a written publication. 2) Slander: the statement is in a transient (non-permanent) form. Slander will usually take the form of defamatory speech or possibly defamatory gestures.

Answer 55

This must be a material loss having some financial value, such as loss of employment, or loss of financial benefits through the refusal of persons to contract with the claimant. Slander is not generally actionable per se and damage must be proved.

Answer 56

These are cases in which the defendant falsely alleges or implies that the claimant 1) is guilty of a crime punishable by imprisonment 2) is unfit to carry out their profession, calling, trade or business

Answer 57

1) Truth: in which the alleged defamation arises from factual statement. 2) Honest opinion: in which the statements are a matter of comment or opinion. The defendant must prove the statements were honest, relevant and made without malice. 3) Publication on a matter of public interest: this will succeed provided the subject matter of the publication is a public interest matter and the publisher ‘reasonably believed’ the publication was in the public interest whether the allegation was true or false. 4) Innocent defamation: in which the statement was published unintentionally. This usually requires an offer to publish a correction and apology, together with appropriate damages. 5) Privilege: this applies in judicial and Parliamentary proceedings and applies to statements made to the police by members of the public.

Answer 58

1) Self - defence : The law allows people to use reasonable force to defend themselves, their property and to defend other persons, such as members of their family or employees. 2)Necessity - s. Essentially it is a plea that the act which is alleged to be a tort was carried out in order to avoid a greater evil. 3) Statutory authority - y is a plea that the action which is alleged to be a tort is permitted by statute law

Answer 59

1) Consent - The defence of consent applies where the claimant agrees to a deliberate act by the defendant which would be a tort if no consent had been given.

Answer 60

arises where the claimant is partly to blame for the injuries which they have suffered at the hands of another.

Answer 61

contributory negligence is no longer a complete defence: it merely reduces the damages awarded to the claimant to the extent that the claimant was himself to blame for the injury. Contributory negligence is, therefore, a ‘plea in mitigation’ (reduction) of liability rather than a true defence. Under the Act deduction will be appropriate where: 1) the cause of the accident was, in some part, the claimant’s own behaviour 2) their behaviour made the results of the accident more serious 3) both of the above.

Answer 62

1) one year where the claim is for libel or slander 2) three years for personal injury claims 3) six years for most other tort actions (mainly property damage claims). - note: that Special rules apply also in the case of latent (i.e. hidden) injuries or damage.

Answer 63

1) Damages: - The object of an award of damages is to compensate the claimant by paying for the loss which the defendant has caused by their wrongful act. 2) Injunction: - In some cases, an award of damages will be inappropriate or inadequate. In many cases, the claimant’s main wish will be to prevent in advance the commission of a tort or stop the defendant from continuing to commit one.

Answer 64

An injunction is a court order commanding the defendant: 1) to do a particular thing (such as knock down a wall which is blocking a right of way) – a mandatory injunction. 2) to refrain from doing a particular thing (such as publish a libellous book) – a prohibitory injunction.

Answer 65

a formal contract which is in writing and is witnessed, and which originally had to be sealed and delivered

Answer 66

under a unilateral contract (unilateral offer) only one of them is legally bound. Under a unilateral offer, the offeror makes the offer and cannot argue that they are not bound by the contract when their offer is accepted.

Answer 67

Under a bilateral contract each party makes a promise to the other and both are legally bound.

Answer 68

A void contract: has no binding effect on either party. While a voidable contract is binding but one (or possibly both) of the parties will have the right, if they wish, to set it aside.

Answer 69

1) there must be an agreement, which in English law is generally shown by offer and acceptance 2) there must be the intention to create legal relations 3) there must be consideration. 4) the agreement must be in the form required by law 5) the parties must have capacity to contract.

Answer 70

1) A time limit or a ‘reasonable time’ An offer will lapse if the offeror imposes a time limit for acceptance and the other party does not accept within that time. 2) Death The death of either party before acceptance will usually terminate the offer. Death after acceptance will not affect most contracts, except contracts for personal services 3) Acceptance Acceptance of an offer will complete the contract and bring the offer to an end. 4) Revocation The offeror may revoke (withdraw) their offer at any time before acceptance 5) Rejection, counter-offer If the offeree rejects the offer, it then terminates.

Answer 71

There must be some positive act of acceptance: an offer cannot be accepted by silence or by doing nothing.

Answer 72

1) Consideration must be real or genuine. The courts will not enforce vague promises. 2) Consideration need not be adequate. If one party makes a bad bargain, the courts will not step in to help. 3) Consideration must not be past. 4) Consideration must move from the promisee. A person cannot enforce a promise (even though it is made to them) if the consideration for it was supplied wholly by some other person.

Answer 73

Although a promise made without consideration cannot be enforced and will not complete a contract, it may be used as a defence to a legal action. If, therefore, X promises not to enforce their strict contractual rights against Y, and the promise is intended to be binding and intended to be acted upon, X may be ‘estopped’ (that is, prevented) from going back on this promise if Y has in fact acted on the strength of it. Promissory estoppel is an equitable principle and the defendant will not be allowed to claim relief unless they themselves have acted fairly (‘he who comes into equity must come with clean hands’).

Answer 74

The purpose ; s to protect them from their own inexperience, which may lead them into agreements which are disadvantageous to them. 1) Contracts which are binding A minor is bound by contracts for ‘necessaries’ and are liable to pay for necessaries which they have bought. A minor is also bound by contracts of employment or of similar agreements such as a contract of apprenticeship. The contract is binding provided that it is, on the whole, for their benefit. 2) Contracts which are binding unless they are repudiated. Certain contracts of a continuing nature are binding on both parties. However, the minor (though not the other party) can avoid liability by repudiating the contract, discharging them from any further liability. 3) Contracts which are not binding on the minor All contracts other than those in the two sections above fall in this category

Answer 75

Contracts made by patients with a mental health condition are generally valid, although the contract can be avoided by the patient if they were unable to understand the nature of the agreement and the other party was aware of this inability.

Answer 76

The terms of a contract must be certain and no contract is formed if a vital term is missing or if the meaning of an essential term is uncertain.

Answer 77

1) Express terms - Express terms are based on the words spoken by the parties or written down by them. 2) implied terms - A term may be implied only if it does not conflict with the express terms of the contract

Answer 78

1) Terms implied in fact A term implied in fact is one which is not actually stated but is presumed to be intended by the parties. 2) Terms implied by custom or usage Terms can be implied by the custom of the market in which the parties to the contract operate, or the usages of a particular locality or trade. 3) Terms implied in law

Answer 79

1) Warranty Affects only some relatively minor aspect of the agreement. --If broken: Injured party has a right to claim damages but not to terminate the contract. 2) Condition Relates to an important aspect of the agreement: it ‘goes to the root’. -- if broken: Victim has a right not only to claim damages but also to terminate the agreement.

Answer 80

Defective contracts may result from: * illegality; * improper pressure; * mistake; * misrepresentation; or * non-disclosure (this needs care as it has only very limited exceptional application in general contract law and in the insurance context only in business insurance

Answer 81

An illegal contract is generally void, and the court will not assist a party to the agreement in any way. The contract therefore cannot be enforced and, furthermore, money or goods delivered under it cannot usually be recovered by an action in court. (A person who has transferred money or property under a void contract that is not illegal will generally be able to recover it).

Answer 82

* when the parties are not in pari delicto (equal in wrongdoing) because, for example, one party entered the contract through improper pressure, fraud or mistake; * when one party ‘repents’, i.e. voluntarily abandons the illegal purpose; and * when the illegality arises under a statute passed to protect a particular class of people (such as tenants or people who borrow from moneylenders), in which case a member of that class will be able to recover their property

Answer 83

1) Duress It is now recognised that any threat to commit a legal wrong can amount to duress if the other party is forced to agree against their will. 2)Under influence it is presumed that certain relationships, such as solicitor and client or doctor and patient, will give rise to improper pressure unless the contrary is proved. This will occur when one party holds a dominant position over the other or is able to take advantage of a relationship of trust and confidence between them.

Answer 84

A contract may be discharged by: * performance; * breach; * frustration; * agreement; or * operation of law.

Answer 85

A contract may be ended by frustration due to: * change in law or operation of law; * destruction of a thing necessary for performance of the contract; * non-occurrence of an event on which the contract depends; * commercial purpose of the contract frustrated; and * death or personal incapacity

Answer 86

The main remedies in the law of contract are: * termination; * an action for damages; * an action for specific performance; and * an action for an injunction.

Answer 87

Privity of contract is a doctrine which restricts the rights and duties created by a contract to the persons who originally made it. Under this doctrine, a contract between A and B cannot confer any legally enforceable benefit on a third party and cannot impose any duties on the third party. ‘Only a person who is a party to a contract can sue upon it

Answer 88

1. the contract provides that they may do so; or 2. the contract purports to confer a benefit on the third party, unless on a true construction of the contract it appears that the parties did not intend the term to be enforceable by the third party -- The third party can only enforce the contractual term if they are expressly identified in the contract by name, or they belong to a general class of persons identified in the contract (e.g. ‘all purchasers of products’). The third party need not be in existence when the contract is made.

Answer 89

An agent is a person who has the authority or power to act on behalf of another person, known as the principal.

Answer 90

The agreement may be a formal one, in writing, or an informal oral agreement. In the case of a formal agreement, the terms of the agency will usually be set out in detail. The terms include the: * authority and powers of the agent; * duties to be performed; * commission or other remuneration; and * period of the agreement

Answer 91

An agency agreement may be implied by the conduct of the parties and the relationship between them. An agency is likely to be implied where one person acts on behalf of and at the request of another, particularly if commission or some other payment is made for the work

Answer 92

A number of conditions must be satisfied for agency by ratification to be possible: * The ‘agent’ doing the act must purport to do it on the principal’s behalf and not on the agent’s own behalf (e.g. the agent must make it clear that it is the principal’s car and not the agent’s own car that is being sold, although the principal need not be named). * The principal must be the person whom the agent had in mind at the time of the act. * At the time of ratification, the principal must have full knowledge of the circumstances relevant to the act, or must have waived further inquiry. * The principal must have existed and have had the contractual capacity to do the act at the time it was done. * Ratification must take place within a reasonable time. * Void or illegal acts cannot be ratified. * The whole contract must be ratified.

Answer 93

ratification validates only past acts of the agent and does not in itself give the agent any authority for the future.

Answer 94

An agency of necessity will arise only in cases where it is impossible to obtain the owner’s instructions in time

Answer 95

insurance an intermediary may, at different times, act on behalf of both the proposer/insured. 1) Giving general advice - 2) Granting cover - insurance intermediaries who are empowered by insurers to grant cover. 3) Collecting premiums 4)Completion of the proposal form

Answer 96

* the agent collects information from the consumer under the express authority of the insurer; * the agent enters into the contract as the insurer’s agent if the insurer has given the agent express authority to do so; or where * the agent does something in their capacity, as the appointed representative of the insurer, for the purposes of the Financial Services and Markets Act 2000 (section 39 of that Act). In any other case, it is to be presumed that the agent is acting as the consumer’s agent unless, in light of all the relevant circumstances, it appears that the agent is acting as the insurer’s agent.

Answer 97

* when an agent gives general advice to the proposer as to the cover they require and the market in which they should place their business; * if no authority is given by the insurers and the only recognition they receive from the insurers is the payment of commission; * when they fill in, alter, or add to the answers in a proposal form, and the proposer knew or ought to have known of this; * when they complete a form on the proposer’s behalf and the form incorporates a wording to the effect that if the form is completed by someone other than the proposer, that person is deemed to be the agent of the proposer.; * when they and the proposer are in collusion to defraud the insurers; or * when the agent gives the insured advice about how to formulate their claim.

Answer 98

* when they have express authority from the insurer to receive and handle proposal forms; * when they handle the forms according to a previous course of business with the insurers and within an implied authority that has arisen; * when they are instructed by the insurers to ask questions and fill in the answers on a proposal form – they are then the insurers’ agent even when the proposal contains a declaration to the contrary; * when they survey and describes the property on the insurers’ behalf; * when they act without express authority, and the company either ratifies their action or has ratified such action in the past; or * when they have express or implied authority to collect premiums.

Answer 99

- An agent must obey the principal’s instructions, provided they are lawful and reasonable, and may be liable in damages if the instructions are not carried out. * To exercise proper care and skill. -The level of care and skill required will depend on the circumstances . Experts and professional people must exercise the care and skill which is expected in their trade or profession. * To perform duties personally. * To act in good faith towards the principal. -The agent must, therefore, not allow personal interests to conflict with those of the principal. * To account for monies received on behalf of the principal. - An agent has the duty to account to the principal for all money received in the course of agency duties.

Answer 100

Delegation may be allowed: * where the principal expressly authorises the agent to delegate all or some of their duties; * where the authority to delegate can be implied from the circumstances – such as the delegation of routine clerical and administrative tasks to employees; * where the delegation is in accordance with trade custom; and * in cases of necessity.

Answer 101

* sue the agent for damages for breach of contract; * in certain cases, sue the agent in tort (for example, where the agent has refused to return the principal’s property); * for a serious breach (such as the taking of a bribe, as described above), dismiss the agent without notice or compensation; * sue the agent (or the donor) to recover a bribe paid to the agent; * if the breach is fraudulent, rescind any contract made through the agent and refuse commission; and * sue for an account if the agent fails to disclose full financial details of his agency dealings.

Answer 102

* the right to remuneration; -An agency may be gratuitous, without payment, but if there is an express or implied agreement to do so the principal must reward the agent for any work done, normally by paying commission. * the right to indemnity. -If agents reasonably incur expenses in the performance of their duties, they have a right to be indemnified (i.e. paid back) by the principal, unless the agency agreement provides otherwise.

Answer 103

* their act was not authorised (or ratified) by the principal; * they are in breach of their duties as the agent (for example, by failing to obey instructions); and * the act for which they claim indemnity is illegal or void by statute.

Answer 104

1) Actual authority The authority of the agent is real, in the sense that they have been given the right to act on behalf of the principal, either expressly or by implication. 2) Apparent authority -The agent has no real authority to do the act in question. -However, it appears, in the eyes of the third party, that they have such authority and are, therefore, able to bind their principal.

Answer 105

* express actual authority. - Express authority arises from the instructions which have been given to the agent, stating what is required and what is allowed. * implied actual authority. - First, agents have implied authority to do anything which is incidental to, or necessary for the carrying out of their express instructions. -An agent may have implied authority to perform those acts which are usually performed by persons in the agent’s position or usual in a particular trade or profession. This is known as usual authority (or customary authority).

Answer 106

Apparent authority arises only when the principal gives the agent the appearance of authority. Apparent authority can arise in cases where: * the principal has restricted the authority of a validly appointed agent; * the apparent agent has never been appointed at all; and * unknown to the third party, the authority of the agent has been terminated.

Answer 107

A disclosed principal is one whose existence is known to the third party at the time the contract is made. When an authorised agent contracts on behalf of a disclosed principal, as described above, the general rule is that the agent simply ‘drops out’ once the contract is made. The principal and third party can enforce the contract against each other but the agent can neither sue nor be sued on it. There are, however, exceptions to this rule. For example: * agents who sign a deed may be liable on it, even though they are known to be contracting as an agent; * trade custom sometimes makes an agent personally liable on a contract; and * agents who sign their name on a negotiable instrument (such as a cheque or bill of exchange) may be liable on it unless they indicate that they are signing on behalf of a principal.

Answer 108

To affect the validity of the agreement, the false statement must: * be one of fact (rather than a statement of law, or of opinion or belief); * be made by a party to the contract; * be material (i.e. something which would influence a reasonable person in deciding whether to enter into the agreement); * induce the contract (i.e. be something that the other party relied upon in deciding to enter into the agreement); and * cause some loss or disadvantage to the person who relied upon it.

Answer 109

In non-consumer (business) insurance, as a matter of strict law, an insurer may seek remedy on the grounds of misrepresentation regardless of whether the misrepresentation is fraudulent, negligent or innocent. In consumer insurance, the insurer may only seek remedy for a misrepresentation which is negligent or fraudulent. This is because the 2012 Act imposes the duty to take reasonable care not to misrepresent material facts. Where the misrepresentation is fraudulent, the innocent party may have the right to claim damages (in the tort of deceit) and an insurer which has been misled may keep any premium that has been paid

Answer 110

On the face of it, the proposer is the only one who has full knowledge about the subject matter of insurance – the thing to be insured.

Answer 111

If there is non-disclosure, and the insurers wish to avoid the policy, do they have to prove that a hypothetical ‘reasonable insurer’ would have declined the risk or asked for a higher premium if the full facts had been known? ** It must also be necessary to show that the underwriter in question was induced by the non-disclosure into entering the contract on the relevant terms.

Answer 112

NO - the right to avoid the contract does not depend upon there being any connection (‘nexus’) between the non-disclosure (or misrepresentation) and the circumstances of the loss.

Answer 113

* An adequate description of the subject matter of insurance. Of course, the insurers will generally ask questions about this in the proposal form or, if no proposal form is used, carry out a survey of the risk. * Details of any unusual features of the subject matter (such as non-standard construction in the case of buildings) which make the risk worse than a normal risk of its class.

Answer 114

1) Identity of the insured - provided that there are not part of the protected characteristics, as described by the Equality act 2010. 2) Criminal acts 3) Previous losses and claims under other policies 4) Any other adverse insurance history

Answer 115

1)Matters of law Everyone is deemed to know the law. 2) Factors which lessen the risk 3)Facts known by the insurers Rather obviously, there is no duty to tell insurers things that they already know 4) Facts which the insurers ought to know * Facts which are notorious (i.e. matters of common knowledge). * An insurer is deemed to know about things that are in the public domain, such as the fact that a state of war exists in some countries. * Facts about the trade which the underwriters insure. 5) Information that is waived by the insurers. 6) Facts that are outside the scope of specific questions 7) Facts which an inspection of the risk should have revealed. 8) Facts which the proposer does not know. An insured ought to know what should reasonably have been revealed by a reasonable search of information available to the insured (whether the search is conducted by making enquiries or by any other means). 9) Convictions that are ‘spent’

Answer 116

At common law, the duty of disclosure begins at the commencement of negotiations for an insurance contract and ends when the contract is formed. There is no general duty to disclose new material facts that arise during the currency of the contract. If the insurers invite renewal of the contract the duty of disclosure is revived.

Answer 117

The insurer is not liable to pay the claim if the insured makes a fraudulent claim. Moreover, the Act clarifies that the insurer may recover from the insured any sums paid by the insurer to the insured in respect of the claim.

Answer 118

A qualifying breach of the duty of fair presentation of the risk is where the insurer shows that, but for the breach, it: * would not have entered into the contract of insurance at all; or * would have done so only on different terms (s.8(1)).

Answer 119

*If the insurer would have entered into the contract, but on different terms (other than in relation to the premium), the contract is to be treated as if it had been entered into on those different terms if the insurer so requires. * If the insurer would have entered into the contract, but would have charged a higher premium, the insurer may reduce proportionally the amount to be paid on a claim. The formula to calculate the percentage to ‘reduce proportionately’ the amount to be paid on a claim is x = (Premium actually charged/ Higher premium) ×100

Answer 120

* the misrepresentation was caused by the consumer’s failure to exercise reasonable care; * the insurer shows that without the misrepresentation, it would not have entered into the contract (or agreed to the variation) at all, or would have done so only on different terms.

Answer 121

An acceptance will be effective only if the parties agree on the essential terms of the contract. In insurance, the parties must have reached agreement on: * the nature of the risk and the subject matter of insurance (what is to be insured and what perils are to be covered); * the duration of the contract; and * the amount of the premium (or at least the method by which the premium is to be calculated)

Answer 122

Once the risk has started to run, the insured is not entitled to any return of premium if the contract is subsequently ended prematurely. This is because the obligation to pay the premium (as a whole) arises at the outset of the contract when the insurer started to provide the cover. The parties may also agree that if the contract ends prematurely the insured's premium payment obligation will cease, but the insured will be responsible for the premium for the period that the insurer provided cover. There can also be cancellation clauses, * Cancellation by the insurer Insurers often include a clause allowing them to cancel the policy mid-term, having given the required period of notice to the insured. In such cases a pro rata return of premium is likely to be granted. * Cancellation by the insured The insured may also be given the right to cancel the policy although something less than a full pro rata return is usually then allowed.

Answer 123

1) Contracts by deed There is no legal requirement for any type of insurance contract to be in the form of a deed. 2) Insurance contracts which must be in writing The only type of insurance contract which must be in writing is a marine insurance policy (Marine Insurance Act 1906, s.22). To comply with the Act, however, the policy need only specify the name of the insured or their agent, be signed by or on behalf of the insurer and specify the subject matter of the insurance with reasonable certainty. 3) Insurance contracts which must be evidenced in writing Contracts of guarantee must be evidenced in writing, under the Statute of Frauds 1677, s.4. This provision may apply to some fidelity guarantee insurances but not to all of them, since modern fidelity policies are often contracts of insurance only and not contracts of guarantee. 4)Other insurance contracts where written documentation is required --motor vehicle insurance, s.143 of the Road Traffic Act 1988 (RTA 1988), required a certificate of insurance is delivered to the policyholder, for the policy to be in effect. However, this was amended by s.9 of the Deregulation Act 2015 so that the failure of an insurer to deliver a certificate no longer affects the validity of the insurance. -- Life insurance contracts are also subject to some formal rules. Section 2 of the Life Assurance Act 1774 requires that the policy shall contain the name of the person interested in it (which suggests the need for a formal policy). Other legislation may require insurers to send to the insured a statutory notice advising them of their right to cancel the policy within a ‘cooling-off’ period.

Answer 124

The key elements of insurable interest are as follows: * a subject matter of insurance; - Although the property is the subject matter of insurance, it is this interest which is the subject matter of the contract. * the policyholder must have an economic or financial interest in the subject matter of insurance; * the interest must be a current interest, not merely an ‘expectancy’; and - English law requires that a person has a current (or present) interest in the subject matter of insurance. A mere hope or expectation of acquiring an interest in the future is not enough. * the interest must be a legal interest.

Answer 125

1) To reduce moral hazard. Moral hazard arises when the granting of insurance actually increases the likelihood of a loss occurring, because it changes the incentives and behaviour of the insured. 2) To discourage wagering

Answer 126

1) Common law In some cases, insurable interest is automatically presumed to exist 2) Contract In some cases, a person will agree to accept responsibility for something for which they would not ordinarily be liable.

Answer 127

The Marine Insurance Act 1906, s.6 provides that the insured must be interested in the subject matter insured at the time of the loss. There is no requirement of insurable interest when the contract is made, and it does not matter that since the time of the loss the interest has ceased. Section 6 also allows the subject matter of a marine policy to be insured ‘lost or not lost’, which means that it is possible for the insured to recover under a marine policy even if they acquired their interest after the loss has occurred, unless they were aware of the loss and the insurer was not.

Answer 128

* The person benefiting from the insurance must have an insurable interest in the life or event insured. If there is no insurable interest the contract is void (s.1, earlier). * The name of the person for whose benefit the policy has been effected must appear in the policy (s.2). * The insured can recover no more than the amount of the value of their interest (s.3). * The Act does not apply to insurances on ships, goods or merchandises (s.4).

Answer 129

1. The first category covers relationships where a precise financial interest might be difficult to establish, but an insurable interest is, nevertheless, presumed to exist because there is a natural tie of love and affection between the parties. These are described as ‘family relationships’. 2. The other broad category is ‘business relationships’ where a financial interest in the life of another arises from a non-consumer (business) contract or from other non-consumer (business) dealings

Answer 130

* Outright owners of property. * Part or joint owners. * Mortgagees and mortgagors * Executors and trustees. Executors and trustees are legally responsible for the property in their charge, and this gives rise to insurable interest. * Landlord and tenant. * Bailees. A bailee is a person who has legal possession of goods belonging to another. They hold them for a particular purpose and, normally, for a limited time only. * People living together. * Finders and people in possession. A person who finds property will have a right to insure it, since possession gives the finder a right to the property that is better than that of any person other than the true owner

Answer 131

You will recall that a warranty in the general law of contract is a term concerning a minor part of the agreement only. If it is broken, the injured party has a right to claim damages but not, in general, to treat the contract as repudiated. A condition, on the other hand, is a term that relates to an important aspect of the agreement: it ‘goes to the root’ of the contract. If such a term is broken, the victim has a right not only to claim damages but also to terminate the contract.

Answer 132

statutory rules (i.e. rules laid down in legislation). ---insurance policies are excluded from the Unfair Contract Terms Act 1977 (UCTA), which allows the wordings of some contracts to be challenged on the grounds that they are unreasonable. Consumer Rights Act 2015 The 2015 Act makes the following changes to consumer contracts: * Removal of the requirement that ‘a term must not have been individually negotiated before a term could be challenged on the grounds that it was unfair’. The consumer is now entitled to claim the protection of part 2 even when the term has been individually negotiated with the trader. Terms which define the main subject matter of the contract or determine the price are excluded from review, as long as they are in ‘plain, intelligible language’. * Prohibition of traders from referring to either a term of a consumer contract or a consumer notice to exclude or restrict liability for death or personal injury resulting from negligence. * Provision that neither an unfair term of a consumer contract nor an unfair consumer notice is binding on the consumer (s.62).

Answer 133

Over the years the courts have developed many rules to help resolve doubts about the meaning of words used in contracts Ordinary meaning: In the case of a dispute, the court will assume that the parties intended the words in question to bear their ordinary meaning. Technical or legal meaning: The presumption that words are intended to bear their common meaning may not apply if the word in question has a clearly established technical meaning. In this case, the technical meaning may be taken to be the one intended. --- The doctrine of precedent, applies to the interpretation of words used in insurance. The importance of context : The meaning of a word always depends on its context. If the meaning is doubtful, a court will first consider the immediate context of a word and then, if necessary, the wider context of the paragraph or section, or even the policy as a whole. Ambiguity: the contra proferentem rule : Words used in insurance contracts may be ambiguous, that is, they may carry two (or more) possible meanings. A dispute may occur because the insured insists on one meaning and the insurers insist on another. Where this is the case, the courts may apply the contra proferentem rule, under which the clause is construed against the party who proposed it (i.e. the drafter of the clause), so that the other party is given the benefit of the doubt.

Answer 134

1. Where printed words conflict with words that are hand-written or typed, the latter take precedence since it is assumed that the parties intended to adapt a standard form to meet the needs of their particular case. On the same principle, an endorsement (i.e. a document or note recording a change in the insurance contact) is likely to overrule anything in the printed policy that appears to conflict with it. 2. In the case of a contradiction between a proposal which led to the formation of the contract and the terms of the policy document which is issued later, the policy document is likely to take precedence, being the final and formal expression of the agreement. 3. An express term of the contract will overrule any implied term. For example, a marine insurance policy may expressly override or modify the implied warranty of seaworthiness which s.39 of the Marine Insurance Act 1906 (MIA 1906) carries into every contract of marine insurance.

Answer 135

A warranty is, essentially, a promise made by the insured relating to facts or to something which they agree to do.

Answer 136

A warranty must be exactly complied with. If it is broken, under s.10 of the Insurance Act 2015, the insurance cover is suspended from the moment the warranty is breached until it is remedied. In principle, the cover is suspended, even if the breach did not cause or have any connection with a loss. Where the breach can be remedied, the insurer is not liable for any loss that occurs from when the warranty is breached until it is fixed.

Answer 137

Express warranties Warranties may be expressly stated in the policy itself. however, The standards that the courts apply to determine whether or not a term which is not expressly stated is a warranty are as follows: * whether the term goes to the root of the transaction; * whether the term bears materially on the risk; and * whether damages would be an adequate remedy for breach Implied warranties Warranties may be implied in marine insurance only. Section 39 of the Marine Insurance Act 1906 carries the implied warranty of seaworthiness automatically into every policy of marine insurance.

Answer 138

1) Conditions precedent to the contract A condition precedent to the contract is one which states, in one form of words or another, that the policy will not come into effect if the insured fails to comply with the term in question. 2) Conditions precedent to liability The expression ‘condition precedent to liability (or recovery)’ is used to describe a term that allows the insurers to discharge themselves from liability for a particular loss (which is tainted by the breach) if the term is broken. 3) Collateral conditions (or 'mere' conditions) Collateral conditions (conditions that are not classified as ‘condition precedent’) are regarded as minor terms, breach of which will still entitle the insured to make a claim under the insurance contract. If the breach is so serious that it goes to the root of the contract, the insurer may terminate the contract. If, on the other hand, the breach is trivial, the insurer will have to pay for the insured’s loss but may claim damages

Answer 139

* on the grounds of late notification, or * because the insured has failed to comply with a policy condition which requires him to take reasonable care to protect his employees against injury or disease. * The use of policy excesses (deductibles) is also prohibited.

Answer 140

The Road Traffic Act 1988, therefore, stipulates that an insurer cannot reject a third party traffic accident's victim's claim by relying on certain types of policy condition or warranty.

Answer 141

* A joint policy (the interest of the assureds' is the same, e.g. husband and wife insure their joint property) is 'indivisible', so that a breach by one insured (such as a breach of the duty of fair presentation of the risk) may cause the whole policy to fail. * By contrast, a breach or default by one insured under a composite (the interest of the insured persons are different, e.g. a mortgagor and mortgagee insured together) policy may invalidate their own cover without affecting the right of other insured persons to claim, provided the latter are innocent of the breach or default

Answer 142

If the insured persons share a common interest in the subject matter, for example, where they are joint owners of property, the policy is likely to be joint. On the other hand, where the interests are different, as in the case of lessor and lessee, or mortgagor and mortgagee, the policy is likely to be composite

Answer 143

Where a policy is joint the rights of the joint insureds stand or fall together, whereas under a composite policy each party has a separate interest and can make an independent claim that is unaffected by the rights, or lack of rights, of the other parties.

Answer 144

brought about a fundamental change in the common law. It provides that a third party (i.e. someone other than one of the original contracting parties) can enforce a contractual term if: * the contract provides that they may do so; or * the contract purports to confer a benefit on the third party. **However - a third party will not be able to claim if ‘on a true construction of the contract it appears that the parties did not intend the term to be enforceable by the third party’.

Answer 145

There are distinct advantages if a trust can be established: * on the death of the insured, the policy money goes directly to the beneficiary and is not counted as part of the insured’s estate; or * if the insured becomes bankrupt, the beneficiary can usually claim the policy money without being subject to the claims of the insured’s creditors.

Answer 146

Sometimes a person who insures is deemed to have established a trust for the benefit of a third party, who can enforce the policy. In circumstances involving bailees and carriers, the third parties who own the goods clearly benefit from an insurance contract to which they are not a party although, at common law, they cannot claim on the insurance in their own names.

Answer 147

Section 148(7) provides that: …a person issuing a policy of insurance under section 145 of this Act shall be liable to indemnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons. The effect is to allow persons other than the policyholder (such as other persons who are permitted to drive the vehicle) to enforce the policy directly, although they were not parties to the original contract. Another exception to the doctrine of privity is found in s.151 of the 1988 Act. In effect, this allows the victim of a road accident to make a direct claim against the motor insurer of the negligent driver who caused the accident. Obviously, a third party such as this cannot be a party to the original motor policy.

Answer 148

The benefit of any insurance effected by the vendor of real property (houses and other buildings) is automatically assigned to the purchaser if, after exchange of contracts, the property is damaged or destroyed.

Answer 149

Section 83 of the Fires Prevention (Metropolis) Act 1774 allows a person who has a legal or equitable interest in buildings (such as a lessee, mortgagee or person who has exchanged contracts) to effectively compel the owner or their insurers to reinstate (rebuild) the property if it is damaged or destroyed by fire.

Answer 150

However, ‘noting the interest’ of a third party does not, in itself, make them a party to the insurance and it is unlikely to bring the Contracts (Rights of Third Parties) Act 1999 into play

Answer 151

When a loss occurs the insured will always be required, by a policy condition, to give notice of the loss. A time limit for notification, such as 15 or 30 days, may be given by the insurer. If the insured fails to comply with the time limit the insurers may, if the notification clause is a condition precedent to insurer's liability, have the right to deny liability for the loss. However, if the notification obligation is a mere condition, the insurer will indemnify the insured. - but if this condition was to be breached there might be a deduction paid out (maybe 15%)

Answer 152

the burden of proving the loss remains with the insured and it is obviously in their best interests to complete the claim form, provide as much information as possible and generally co-operate with the insurers in their investigation of the loss. To discharge the burden of proof, the insured must be able to establish two things: * that the loss was caused by the operation of an insured peril; and * the amount of his loss.

Answer 153

* handle claims promptly and fairly; * provide reasonable guidance to help a policyholder make a claim and appropriate information on its progress; * not unreasonably reject a claim (including by termination or avoiding a policy); and * settle claims promptly once settlement has been agreed

Answer 154

The Enterprise Act 2016 added s.13A to the IA 2015, which allows the court to award damages for late payment where the insurer has acted unreasonably.

Answer 155

If one insured and one uninsured event are competing, the insured event prevails and the loss is deemed to have been caused by an insured risk. If one excluded and one insured event are competing, the exclusion prevails and the insurer may successfully reject liability.

Answer 156

The English courts have refused to allow recovery for mere prevention costs – unless the policy provides otherwise.

Answer 157

* Falsification of a loss – i.e. the insured makes a claim when they have suffered no loss. * Deliberate loss – i.e. a policyholder deliberately causes the loss in order to bring a claim. * Exaggeration of a loss – i.e. if the insured exaggerates the amount of loss, the claim would be fraudulent. * Lying about the circumstances of a genuine loss to improve the chances of a claim being paid by the insurer. An insurer’s rejection of a claim on this basis is referred to as the ‘fraudulent device’ defence. However, this type of fraudulent claim should be approached with case after the Supreme Court's ruling in the Versloot case which will be discussed below in Fraudulent devices on page 8/19.

Answer 158

Insurance fraud is when someone invents or exaggerates a claim, or does not tell the truth in order to obtain cheaper cover

Answer 159

* dishonestly makes a false representation; * dishonestly fails to disclose to another person information which he or she is under a duty to disclose; or * dishonestly abuses their position

Answer 160

For criminal prosecution of fraud to succeed, the prosecuting body will have to meet the criminal standard of proof – i.e. prove the case ‘beyond a reasonable doubt’. In order to enforce its rights to a civil remedy following a fraudulent claim, an insurer will need to meet the civil standard of proof which requires that they establish that the person committed fraud ‘on the balance of probabilities’

Answer 161

IA 2015 has codified and clarified the legal position for insurers. The key points are as follows: * If the insured makes a fraudulent claim, the insurer is not liable to pay the claim. It may recover any sums paid in respect of the fraudulent claim and can treat the contract as having been terminated with effect from the time of the fraudulent act (s.12(1)). * If the insurer terminates the contract, it does not have to return any premiums paid and it may refuse to pay any claims arising after the time of the fraudulent act (s.12(2)). This does not affect any claims relating to events occurring before the fraudulent act * Section 13 regulates fraudulent claims in the case of group insurance. For example, when an employer takes out employers’ liability insurance in favour of their employees as required by the Employers’ Liability (Compulsory Insurance) Act 1969. Section 13 provides that when one of the insureds (e.g. an employee) makes a fraudulent claim, this does not have an effect on the other employees who are insured under the same insurance and whose claims were not fraudulent.

Answer 162

This position has been changed by the Criminal Justice and Courts Act 2015 s.57, which states where ‘on the balance of probabilities that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim’, the court ‘must dismiss the primary claim, unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed’. The result of this is that where part of a claim is found to be ‘fundamentally dishonest’ (a term which is not defined by the legislation), the entire claim should be struck out by the court.

Answer 163

Where the person who has committed the fraud has been convicted, a confiscation order can be made to recover the assets that have been fraudulently obtained, and the insurer which has paid out on a fraudulent claim may be able to recover their money through this route (POCA Part 2). Even where a conviction cannot be made, Part 5 of POCA makes it possible to recover criminal assets in limited circumstances

Answer 164

These are policies in which insurers agree to pay a specified sum when a particular defined event occurs. The insured does not have to prove that they have suffered a loss, only that the event in question has happened.

Answer 165

A typical example is a policy which has a deductible for the assured to bear before making a claim against the insurer. On the other hand, for instance, in the case a 'new for old policy', insurers agree to provide more than an indemnity. Finally, you will recall that a claimant may be able to recover a sum greater than their actual loss if they are a person with a limited interest in the subject matter, such as a bailee of goods. However, you will also recall that if they do so, they hold the insurance money in excess of their own actual loss for others who have in interest in the property, such as the bailor of the goods

Answer 166

This means that the exact amount of the compensation is not known in advance but is to be fixed afterwards on the basis of the loss actually suffered.

Answer 167

The general rule is that the measure of indemnity for the loss of any property is determined not by its cost, but by its value at the date of loss and at the place of loss. Under a property insurance, the policyholder can recover only the amount of the value of the property itself: they cannot claim for loss of prospective profits or other consequential losses unless these are specifically insured.

Answer 168

Where a building is damaged, the normal basis of indemnity will be the cost of repair or reconstruction at the time of the loss with, in many cases, a deduction for ‘betterment’.

Answer 169

* First, when a building is repaired, certain parts of the structure will often have to be renewed so that when the work is complete the building is likely to be in a better condition than it was before the loss. *The other way in which betterment can arise is where the quality of the building is improved in the course of carrying out repairs.

Answer 170

* the cost of repair less an allowance for wear and tear, if applicable; or * the cost of replacement, less wear and tear, if repair is not possible. In the latter case, it is assumed that there exists a ready second-hand market where the insured can purchase a replacement. In some cases, however, there is no ready second-hand market for such property because when it is disposed of, it is destroyed or sold as scrap. In this case the insured may be obliged to purchase new equipment (which is likely to be superior) and a deduction for betterment will normally be appropriate.

Answer 171

The measure of indemnity will not necessarily be the cost to the manufacturer of producing the stock. It will be what it will cost them, at the time and place of the loss, to replace the goods or return them to the condition they were in before they were destroyed. In the case of raw materials, this will be the replacement cost including delivery to site. In the case of other stock, it will be the same raw material costs plus labour and other costs which will be incurred in reproducing the half-made or fully completed goods which were lost.

Answer 172

Indemnity will be based on the cost at the time of loss of replacing the stock (i.e. manufacturer’s or wholesale price) including transport and handling costs to the insured’s premises.

Answer 173

In the case of both livestock and produce, the local market price is the normal basis of an indemnity. With other commodities, as we have seen, the insured is not entitled to any potential profit on sale. Farming stock is different: whereas in other markets there is a buying price set by the merchant and a higher selling price, in the case of farming stock, there is one market price on any particular day whether one is buying or selling.

Answer 174

The Marine Insurance Act 1906 provides for both unvalued and valued policies. In fact, most marine policies are valued. In the case of an unvalued marine policy, the basis for the measure of indemnity (unless another basis has been agreed) is the ‘insurable value’, which is the value of the subject matter at the commencement of the risk. This is the amount recoverable in the event of a total loss.

Answer 175

In the case of marine insurance the answer is yes: average applies automatically by virtue of s.81 of the Marine Insurance Act 1906. The position regarding types of non-marine insurance is less clear. It is probably safe to assume, in relation to household insurance at least, that average cannot be applied unless there is an express average clause in the policy.

Answer 176

If there is no clause in the policy (such as the one above) giving the insurers the right to settle in some other way, the insured has a legal right to insist on money payment. Where insurers make a cash payment, there is no general obligation on the part of the insured to spend the insurance money on restoring the property in respect of which the claim was paid. However, the insured may be required to do so by virtue of their relationship with a third part

Answer 177

The right of one person, having indemnified another under a legal obligation to do so, to stand in the place of that other and avail himself of all the rights and remedies of that other, whether already enforced or not

Answer 178

The main purpose of subrogation is simply to prevent what is known as the ‘unjust enrichment’ of the insured. It is sometimes suggested that subrogation prevents the ‘guilty’ party (such as the plumber in example 10.1) from being ‘let off the hook’

Answer 179

At common law the insurers must indemnify the insured (i.e. pay the claim) before they can exercise subrogation rights. However, this means that insurers do not have complete control from the date of the loss and their ability to recover could be seriously prejudiced by delay or by some other action taken by the insured.

Answer 180

If there is any surplus after the insurers have recovered their money the insured is entitled to keep it

Answer 181

If the insurers make a payment outside the terms of the policy, making it clear that no legal obligation to pay is accepted, and that payment is made merely as a favour (known as an ‘exgratia’ payment), they are not entitled to subrogate against a third party

Answer 182

Contribution is the right of an insurer to call upon others similarly, but not necessarily equally liable to the same insured, to share the cost of an indemnity payment

Answer 183

* each policy is liable for the loss; * each insures the same interest in the subject matter; * two or more policies of indemnity exist; * each insures the subject matter of the loss; and * each insures the peril which brings about the loss.

Answer 184

Judicial Committee of the Privy Council

Answer 185

an escape of a dangerous thing from the defendant’s land.

Answer 186

benefit to the person receiving it or a detriment to the person giving it.

Answer 187

C. in fact.

Answer 188

there is no insurable interest at inception

Answer 189

Apparent authority

Answer 190

Tim cannot ratify the contract excluding the minor term as the whole contract must be ratified.

Answer 191

It was not agreed, but Alice’s work was in her usual line of business for which she would normally be paid.

Answer 192

proposer and the insurer have a duty to deal honestly and openly in negotiations leading to formation of the contract

Answer 193

Retaining the premium would be unfair to the policyholder.

Answer 194

a financial relationship recognised at law.

Answer 195

Consumer Rights Act 2015.

Answer 196

It is invalid only for the period that the insured continues to breach the condition

Answer 197

a condition precedent to liability.

Answer 198

The market value of an equivalent car had increased.

Answer 199

a partial loss

Answer 200

Tina would need to notify the insurers and obtain their consent. if not The clause may also state that the insurance will be invalid if the insured already has cover on the same risk with another insurer

Answer 201

the property is abandoned by the insured.

Answer 202

C. £4,800 (Independent liability of policy X/ independent liability of policy X+Y)* loss (8,000/20,000)*12,000

Answer 203

By the insurer in the name of the insured for the amount of the claim payment and the policy excess

Answer 204

A. House of Commons. B. House of Lords. C. Monarchy.

Answer 205

A. be fully responsible for his criminal actions. B. be a beneficiary of a trust.

Answer 206

B. in contract. C. in the tort of negligence. E. under statute

Answer 207

Every partner has a limited personal liability for the debts of the partnership. Partners will not be liable for the tortious damages of other partners but potentially for the contractual debts depending on the state.

Answer 208

its activities are defined in the memorandum of association

Answer 209

The standard for the electrical profession only. --allowance for level of experience. is not taken into account.

Answer 210

General damages.

Answer 211

C. 6 years

Answer 212

in the form of a deed. When it isn't in the form of a deed, then the promises is not enforceable

Answer 213

exercising a lien on the principal’s property

Answer 214

Ostensible authority

Answer 215

Both the agent and the principal.

Answer 216

An unlimited amount in respect of Mia’s husband and she is not legally allowed to insure the life of her son

Answer 217

In neither consumer nor non-consumer insurance policies.

Answer 218

Claim for damages.

Answer 219

policyholder to prove on the balance of probabilities

Answer 220

Terrorism need only be a remote cause of the loss in order for the exclusion to operate.

Answer 221

professional liabilities.

Answer 222

The Road Traffic Act 1988.

Answer 223

establishing a trust for the third party

Answer 224

a new policy at new terms.

Answer 225

subsidiary companies of the policyholder.

Answer 226

is subject to a policy excess

Answer 227

Persuasive precedents are influential but non-binding decisions A. a decision made in the lower courts. B. a Decisions of courts outside the English system (e.g.. the Judicial Committee of the Privy Council). D. obiter dicta of senior judges in a high-level decision

Answer 228

Persuasive precedents are influential but non-binding decisions. The following may be persuasive to a greater or lesser extent: * Decisions made in lower courts or courts of equal standing. * Decisions of courts outside the English system (e.g. Judicial Committee of the Privy Council, Irish, Scottish, Commonwealth and United States Courts). * Obiter dicta (especially of senior judges in high-level decisions). * Textbooks, learned treaties and the law of other jurisdictions (e.g. Roman law) – these sources are very rarely used, and only in cases where there is no other authority, binding or persuasive.

Answer 229

A. Assault. B. False imprisonment. E. Trespass to land.

Answer 230

A. An express term overrules or modifies any implied term C. Handwritten endorsements take priority over printed words in a policy document. D. A policy document takes priority over a proposal form.

Answer 231

In insurance, the parties must have reached agreement on: * the nature of the risk and the subject matter of insurance (what is to be insured and what perils are to be covered); * the duration of the contract; and * the amount of the premium (or at least the method by which the premium is to be calculated).

Answer 232

under English law, a valid insurance contract may exist before the insured has actually paid the premium, provided they have agreed to pay. However, we have also suggested earlier that insurers may stipulate that the risk will not run until the premium is paid. In this case, actual payment is required before insurers can incur any liability under the contract.

Answer 233

Once the risk has started to run, the insured is not entitled to any return of premium if the contract is subsequently ended prematurely. This is because the obligation to pay the premium (as a whole) arises at the outset of the contract when the insurer started to provide the cover. However, if the insurers have never been on risk at all, the insured is entitled to recover their premium

Answer 234

No. The only type of insurance contract which must be in writing is a marine insurance policy (Marine Insurance Act 1906, s.22).

Answer 235

Policies on goods are not subject to any statutory requirement of insurable interest (other than on goods involved in a marine adventure which are governed by the Marine Insurance Act 1906).

Answer 236

The Act provides that ‘the fact that a contract relates to gambling shall not prevent its enforcement

Answer 237

Where there is no insurable interest, the contract is generally void However, policies governed by the Life Assurance Act 1774 are, technically at least, illegal as well as void. You may now also recall that money paid under an illegal contract cannot be recovered in court provided the parties are ‘in pari delicto’ (‘equal in wrongdoing’).

Answer 238

1) Own life 2)Spouses --- No one else does

Answer 239

1) Partners 2) Employer and Employees 3) creditors and debtors.

Answer 240

In general terms, it appears that where the giver intends the money to be for the sole benefit of the insured it cannot be claimed by way of subrogation.

Answer 241

The action must be brought in the name of the insured and legally it is regarded as the insured’s own action although, as we have seen, the insurers will, effectively, have the benefit of it. When an action is taken by insurers in the name of the insured, it must be for the whole loss and not just for the portion which has been borne by the insurers. This is because, as a general rule, the law only allows a person to sue once for a wrongful act that has been committed against them

Answer 242

* subrogation gives the insurer the right to pursue a claim against a third party for the loss of the subject matter, whereas abandonment and salvage confer rights only over the subject matter itself; * an action by way of subrogation cannot be brought in the insurer’s own name (with one exception), whereas an insurer who accepts abandonment becomes the owner of the goods; * the insurer can make a profit on the abandoned property, whereas subrogation allows the insurer to recover no more than their own payment; and * subrogation operates automatically as a result of the principle of indemnity, whereas abandoned property need not be accepted by the insurer.

Answer 243

The second policy never operates because of the existing policy in force. This means that the first insurers are liable for the loss because no insurance other than their own has ever come into effect.

Answer 244

Under the maximum liability method the loss is shared by the insurers in proportion to the maximum amount of cover that is available under each policy which, in the case of property insurance, is usually equivalent to the sum insured. Formula: (policy insured vale/total insured value )*loss

Answer 245

Under the independent liability method, the liability of each insurer for the particular loss which has occurred is assessed as though its policy were the only one in force. The figure that results in each case represents the independent liability of the insurer for the loss.

Answer 246

A warranty must be exactly complied with. If it is broken, under s.10 of the Insurance Act 2015, the insurance cover is suspended from the moment the warranty is breached until it is remedied

Answer 247

A lien is the right to retain the goods of another as security for payment of a debt. It should be emphasised that a lienor (person with a lien) has the right to retain goods but, generally, not the right to sell them. Finally, a lien comes to an end when the principal pays or offers to pay the sum due.

Answer 248

1) Merely moving goods from one place to another is a trespass but not a conversion, whereas stealing goods or selling borrowed goods is a conversion. 2)Wrongfully causing damage to another’s goods will always be a trespass but will amount to a conversion only where the goods are effectively destroyed or made useless.

Answer 249

Express - When Duties are set out, and agreed upon in a formula or informal. Implied - When the agreement is implied by the conduct of the parties between them.

Answer 250

This is were the relationship of principle and agent is created retrospectively. Marine

Answer 251

- it depend son if the agent was working for the insured or the insurer. -- if they are acting for the insured, the insurers may be able to avoid the policy. * however, this is occurs then the insured may sue the agent for a breach of duty. -- If acting for the insurer, they will be unable to cancel the policy. but may be able to sue.

Answer 252

An action carried out by an agent is treated in law as the principle's own actions. Therefore the principle become generally liable for their agents deeds an can be bound in contract by agent. The law assumes that the principle is aware of information which has been given to the agent.

Answer 253

Actual authority - The authority of an agent is real, in the sense that they have been given the right to act on behalf of the principle. Apparent authority - The agent has no real authority to do the act in question. however, it appears in the eyes of the third party, that they have such authority, and are therefore able to bind their principle.

Answer 254

this authority arises from the instructions which have been given to their agents. If instructions are ambiguous, then the agent should seek clarification from the principle. however if this cannot be obtained, no liability will fall on the agent provided they acted in good faith, and interpreted the instructions in a reasonable manner

Answer 255

An agent has implied authority to perform those acts which are usually performed by person's in the agents position or usual in a particular trade/profession

Answer 256

Here a principle is bound, not only by acts which are within the actual authority of the agent, but also act which are within the authority they appear to have. -meaning agent could do something which they have no right to do, but still bind the principle.

Answer 257

A person may hold out another person as being their agent when the latter has no authority at all, with the results being that the third party is deceived

Answer 258

Disclosed principle is where the existence is known by the third party at the time the contract is made. -- Therefore once a contract is made, the agent drops out and can no only be sued nor can sue.

Answer 259

* agents who sign a deed may be liable on it, even though they are known to be contracting as an agent; * trade custom sometimes makes an agent personally liable on a contract; and * agents who sign their name on a negotiable instrument (such as a cheque or bill of exchange) m

Answer 260

The general rule is that the undisclosed principal can enforce the contract against the third party.

Answer 261

the third party is unaware that they are dealing with an agent.

Answer 262

The general rule is that the undisclosed principal can enforce the contract against the third party

Answer 263

An undisclosed principal cannot: * sue if they did not exist or lacked capacity when the contract was made; * ratify a contract; * sue if the contract expressly provides that the person making it is the sole principal; and * sue if the third party can prove that they had some good reason for dealing with the agent personally (e.g. because of their reputation or special skills).