Insurance Law

Question 1

What is the main way to law is classified?
Describe these distinctions.

Answer 1

A basic distinction is made between Public and Private(civil) law.

1) Public law, is concerned with the legal structure of the state and relationships between the State and individual members of the community. It also governs the relationship between one state and another.

2) Private Law, governs the relationship between legal persons such as individuals, businesses and other organisations.

Question 2

What is included in the definition of public law?

Answer 2

1)Constitutional Law, which is concerned with the structure of the main institutions of government and their relationship with each other.

2) Administrative Law, Concerns the legal relationship between private citizens and the various agencies of local and central government, and the impact of their activities on ordinary individuals.

3) Criminal Law, Concerned with the control of behaviour which harms or threatens the peace and stability of the community.

Question 3

What are the Characteristics of English Law?

Answer 3

1) Age of Continuity - English law has a long history.

2)Little codification - Only certain part of English law is codified.

3) Judge-made law - The system of binding precedent allows the decision of judges to become part of the law itself and allows the law on a particular subject to adapt and develop through a series of binding decisions.

4) Independence of the Judiciary - Judges, while appoint by the Lord Chancellor, are free from government control.

5) Adversarial system - Where a judge remains neutral, and listens to each sides evidence, before giving judgement.

6) No Written constitution - Rather then having a set of rights, British citizens are allowed to do anything as long it is not specifically prohibited by law.

7)Rule of Law -

Question 4

What is principles that describe the rule of law?

Answer 4

1) The powers exercised by politicians and officials must have a proper foundation and be based on an authority given to them by law.

2) The law generally should be reasonably certain and predictable

3) People should be treated equally by the law, which should not allow unfair discrimination.

4) No one should be punished or deprived of their property, status or rights unless they are given a fair hearing by an impartial court or tribunal.

5) Every person should have a right of access to the court, which will defend the liberties and freedoms of the individuals.

Question 5

What does the term common law refer to?

Answer 5

refers to a unified system of law that is to those parts of our law that are contained in the decisions of the courts, such as case law rather than statute law.

Question 6

What does Equity help with?

What are the principles?

Answer 6

Can be describes as a gloss or supplement to the common law, and it is best understood as a collection of rules offering an alternative solution to some legal problems.

Principles are: The laws of trust
Specific performance
injunctions

Question 7

What are the sources of English Law?

Answer 7

Law must continue to develop to reflect changes in the way we live:
1) Social changes - of how people are expected to change.
2) Technological changes -

The main sources of new laws -
1) Legislation 2) Judicial precedent (or case law)

The additional ways are -
1) Local customs 2) Legal books and treatises.

There is also the European Community Law

Question 8

What is legislation?

Answer 8

The law which has been created in a formal wat and set down in writing.

The only body which has power to make general legal rules is Parliament.

Question 9

What is the Procedure for the enactment of public bills?

Answer 9

stage 1 ) First reading - A formality where the The clerk of the house read out only the title of the bill to inform the Members of its existence.

stage 2) Second reading - Where the merits of the bills are debated and a vote is taken as to whether it should be proceed.

stage 3) Committee stage - Where the details of the bill are discussed by a standing Committtee. At this stage, amendments to the bill are proposed and are voted upon.

stage 4) Report stage - Where the Bill is amended by the Committee is reported to the house as a whole, which are debated again.

Stage 5) Third reading - Offers the final opportunity for debate. But in practice, at this stage, only minor changes are made.

Question 10

What is the difference between a Public and Private bill?

Answer 10

1) A Public Act is one which contains law affecting the whole community.

2) A Private Act is passed on the benefit of a particular individual, organisation or group.

Question 11

What are the ways that the law can be tidied up?

Answer 11

There are two ways:

1) Consolidating act, which repeals all previous legislation on a subject and re-enacts it in one logically arrange statue.

2) Codifying acts, These acts not only consolidate, but also include principles embodied in case law.

Question 12

What is Retroactive (or retrospective) legislation?

Answer 12

Legislation which affects acts done or rights acquired before it came into effect.

Question 13

What is delegated legislation.

What are the forms of it?

Answer 13

Enabling Acts are acts of Parliament which lay down general rules often confer on persons or bodies the power to make detailed rules and regulation for the purpose of implementing the Act.
The rules made under the authority of these acts are known as delegated legislation.

1) Statutory instruments -

2) Orders in council -

3) Bye-laws -

Question 14

What are the three common law rules, which the courts use to assist with interpretation ?

Answer 14

1) Literal rules - This is the primary rule, which take precedence over the others. According to the rule, words and phases should be construed by the courts in their ordinary sense, and the ordinary rules of grammar and punctuation should be applied.

2)Golden rule - Where the meaning of the words in a statute, if strictly applied, would lead to an absurd result, and there is an alternative interpretation which avoids the absurdity, the courts are entitled to choose that latter meaning.

3) - Mischief rule - Here the judge will consider the meaning of the words in the act in the light of the abuse or “mischief” which the Act was intended to correct, and choose the interpretation which makes the Act effective in suppressing the mischief.

Question 15

What are the presumptions that apply to the construction of a statue (unless there are clear words to the contrary)

Answer 15

1) is not intended to create a “strict” criminal offence

2) Is not intended to oust the jurisdiction of the court.

3) Is not intended to have retrospective effect.

4) Applies only to the UK.

5) Is not intended to infringe the requirements of international law.

6)Does not bind Government (Crown)

7) is not intended to interfere with vested (established) rights or allow confiscation of property without compensation.

Question 16

What is the effect of the European communities Act on statutory interpretation?

Answer 16

UK laws passed or made before the end of the transition period must be interpreted, as far as possible and so far as relevant, in accordance with EU Law.

From the end of the transition period, the UK can implement new polices in many areas that previously fell within EU competence. Now only in Northern Ireland does EU law have supremacy over the UK legal system

Question 17

Describe the civil court system.

Answer 17

Minor civil cases are dealt with by the County Courts.

Major Cases (Usually those involving claims for substantial sums of money) are heard at first instance by one or other three divisions of the High court.

Appeals from both the county court and all divisions of the High are dealt with by the Court of Appeal.

The final court of appeal within the UK is the supreme Court.
Certain appeals can also leapfrog the court of appeal, and go to the supreme court

Question 18

Describe the Criminal court system.

Answer 18

Minor criminal offences are dealt with by Magistrates’ Courts, from which there may be an appeal to the Crown Court or High court.

More serious offences are dealt with at first instance in the Crown court after “transfer for trail proceedings” in the Magistrates Court.

Question 19

What is a Precedent?

Answer 19

A precedent is a decision in a previous legal case where the facts where the facts were similar to the case before the court.

Judges must pay regard to previous decisions, and that it was not for the court to reject them.

Question 20

What is the principle of Ratio Decidendi?

Answer 20

This principle is regarding precedent, and states that Judges are not bound to follow an eailer case, but the principle established in the case.

It is based on:
1) The material facts of the case.

2) The decisions of the Judge or Judges

3) The reason for the decision.

Question 21

What is the general principle that decides if a principle is binding or not?

What is the hierarchy that decides whether a precedent is binding or not?

Answer 21

A judge is only bound by decisions made in a court higher than their own or, in some cases, a court of equal standing.

The decisions of the Supreme court are binding on all lower courts - and the supreme court is not bound by its own decisions .

The court of Appeal is binding on the lower courts. It is also generally bound by its own decisions, unless two such decisions conflict.

in the High court the decision of a judge at first instance is not binding on another High court judge sitting alone. It is instead only a strongly persuasive influence.

The county court are bound by all decisions of the higher courts.

Question 22

What is reversing?

Answer 22

If a person A, loses a case against another, B but then appeals successfully the decision in the first hearing is said to be reversed.

Question 23

What is overruling?

Answer 23

Overruling occurs where a higher court decides a matter which is governed by a precedent set in an earlier case on a different principle.

Question 24

What is Disapproving?

Answer 24

A decision is said to be disapproved when a court offers the opinion that an earlier case is wrongly decided but it not in a position to overrule it.

Question 25

What is Distinguishing?

Answer 25

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.

Question 26

What are the Advantages of precedent?

Answer 26

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.

Question 27

What are the Disadvantages of Precednet?

Answer 27

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.

Question 28

What are the three main categories that insurance court cases fall into?

Answer 28

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.

Question 29

What is the current Civil court system - (The Woolf report recommendations)

Answer 29

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

Question 30

How are cases allocated?

Answer 30

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.

Question 31

What are the four main institutions of the European Union?

Answer 31

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.

Question 32

What are the sources of European Law?

Answer 32

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

Question 33

Funding litigation - What were the significant reform which came into place in April 2013?

Answer 33

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.

Question 34

Damages -based agreements. What are the Caps on amount of damages that can be taken as a contingency fee.

Answer 34

personal injury - 25%

Employment - 35%

All other claims - 50%.

Question 35

What is the definition of a Legal personality?

Answer 35

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.

Question 36

What are the two categories, that the law splits Legal personality?

Answer 36

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

2) Juristic persons (corporations)

Question 37

What are the two types of corporations?

Answer 37

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.

Question 38

What are the three ways to classify corporations aggregate?

Answer 38

1) Chartered corporations by Royal Charater

2) Statutory corporations by private act of parliament.

3) Registered corporations under the companies act.

Question 39

What is a Unincorporated association?

What could they be?

And why are they treated differently then corporations?

Answer 39

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.

Question 40

What is the definition of Tort?

Answer 40

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

Question 41

what does unliquidated damages mean?

Answer 41

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.

Question 42

Is injury or damage required for there to be a tort?

Answer 42

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.

Question 43

What is a international tort

Answer 43

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

Question 44

Does a tort have to be international?

Answer 44

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

Question 45

What is a strict liability?

What is the other name for it?

Answer 45

A tort causes when someone’s action was neither international or negligent.

Also known as a “no-fault liability”

Question 46

Is there a deference for a strict liability

Answer 46

Yes there can be.

Question 47

Does there need to Malice, when committing a tort?

Answer 47

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.

Question 48

When is Malice relevant in tort?

Answer 48

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.

Question 49

What are the Characteristics of Trespass

Answer 49

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.

Question 50

What are the three forms, that make up trespass to the person

Answer 50

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.

Question 51

Define trespass to goods

Answer 51

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

Question 52

What is Conversion (trespass to goods)

Answer 52

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.

Question 53

Define trespass to land.

Answer 53

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

Question 54

Must trespass to land be intentional?

Answer 54

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.

Question 55

What are the three forms of Trespass to land?

Answer 55

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.

Question 56

What are the three essentials for a action of negligence to succeed?

Answer 56

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

Question 57

What is a duty of care.

What does this help determine?

Answer 57

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.

Question 58

What is a breach of duty ?

Answer 58

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.

Question 59

What factors are taken into account, by the court, when determining if there has been a breach of duty?

Answer 59

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.

Question 60

p

Answer 60

-

Question 61

When does liability arise from a negligent misstatement

Answer 61

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.

Question 62

When there is negligence that results in financial loss is the defendant liable?

Answer 62

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.

Question 63

Who can sue for negligence for psychiatric illness?

Answer 63

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

Question 64

What are the two categories of Nervous shock cases?

Answer 64

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

Question 65

Secondary victims are not entitled to damages unless they also establish proximity in terms of?

Answer 65

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.

Question 66

What are the other sources for psychiatric illness?

Answer 66

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

Question 67

Define Public Nuisance

Answer 67

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’.

Question 68

Define Private nuisance

Answer 68

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).

Question 69

What are the two forms of Private nuisance?

Answer 69

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).

Question 70

For a Private nuisance to be accountable, what must be a result from the action?

Answer 70

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

Question 71

When is liability said to be vicarious?

Answer 71

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

Question 72

What is the two stage test, to decide whether a person could be made vicariously liable for the torts committed by another involved a two-stage test

Answer 72

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?

Question 73

What did the occupiers liability act 1957 do?

What did it change

Answer 73

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.

Question 74

What was the finding of the British Railways Board v. Herrington (1972)?

Answer 74

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

Question 75

What did the Occupiers’ Liability Act 1984 do?

Answer 75

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

Question 76

Occupiers’ Liability Act 1984 - What are the limitations given to trespassers when compared to the broader duty to visitors under OLA 1957?

Answer 76

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.

Question 77

When can someone sue for a defective product?

Answer 77

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.

Question 78

Defective products - what would an action in tort be based on

Answer 78

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

Question 79

What are the two forms of tort of defamation?

Answer 79

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.

Question 80

Defamation - what is the damage

Answer 80

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.

Question 81

What are the two cases of slander which are actionable?

Answer 81

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

Question 82

What are the defences of slander?

Answer 82

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.

Question 83

What are the general defences in tort?

Answer 83

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

Question 84

What is the defence of Consent and volenti non fit injuria?

Answer 84

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.

Question 85

What is contributory negligence?

Answer 85

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

Question 86

What did the Law Reform (Contributory Negligence) Act 1945 do?

Answer 86

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.

Question 87

Claims based on tort are governed by the Limitation Act 1980 as amended by the Latent
Damage Act 1986. The main limitation periods are ?

Answer 87

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.

Question 88

What are the Remedies in tort?

Answer 88

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.

Question 89

What is an injunction?

Answer 89

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.

Question 90

Define a contract under seal?

Answer 90

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

Question 91

What is a Unilateral contract?

Answer 91

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.

Question 92

What is a bilateral contract?

Answer 92

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

Question 93

What is the difference between a void and voidable contract?

Answer 93

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.

Question 94

What are the 5 essentials for the formation of a valid contract?

Answer 94

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.

Question 95

Contract - When would an offer end?

Answer 95

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.

Question 96

An offer of acceptance must have?

Answer 96

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

Question 97

What are the rules of consideration?

Answer 97

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.

Question 98

What is Promissory estoppel?

Answer 98

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’).

Question 99

Contracts - (Family Law Reform Act 1969) - what are the special legal rules which govern contracts made by minors?
and the purpose for it?

Answer 99

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

Question 100

Contracts - what are the rules regarding patients with a mental health condition?

Answer 100

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.

Question 101

Contract - what is the certainty of terms?

Answer 101

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.

Question 102

Classification of terms:
What is an express and implied terms?

Answer 102

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

Question 103

What are the ways a terms can be implied?

Answer 103

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

Question 104

What did the difference between a condition and a warranty?

What happens if either is broken?

Answer 104

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.

Question 105

What are the ways a contract would be defective?

Answer 105

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

Question 106

Defective contracts - Effects of illegality?

Answer 106

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).

Question 107

What are the exceptions- that would make it possible for a claimant to recover property transferred under a illegal contract?

Answer 107

• 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

Question 108

How can a contract be voidable due to improper pressure?

Answer 108

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.

Question 109

What are the ways a contract can be discharged?

Answer 109

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

Question 110

What are the ways a contract could be ended by frustration?

Answer 110

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

Question 111

What are the Remedies in contract.

– If a contract is breached?

Answer 111

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.

Question 112

What is privity to contract?

Answer 112

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

Question 113

Contracts (Rights of Third Parties) Act 1999, what does this provide to third parties?

Answer 113

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.

Question 114

What is an agent?

Answer 114

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

Question 115

An Agency by agreement - Describe one that has be made by express agreement

Answer 115

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

Question 116

An Agency by agreement - Describe one that has be made by implied agreement

Answer 116

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

Question 117

What conditions must be satisfied for agency by ratification to be possible?

Answer 117

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.

Question 118

Does ratification allow an agent authority for future events ?

Answer 118

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

Question 119

When will an agency by necessity arise?

Answer 119

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

Question 120

Who is the principal of an insurance agent?

What are they expected to do?

Answer 120

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

Question 121

According to the consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA), when is an agent to be taken as the insurers agent?

Answer 121

• 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.

Question 122

When is an agent deemed to be an agent of the proposer ?

Answer 122

• 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.

Question 123

When is an agent deemed to be the agent of the insurer?

Answer 123

• 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.

Question 124

What are the duties of an agent?

Answer 124

• 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.

Question 125

Duties of an agent, when delegation be allowed?

Answer 125

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.

Question 126

What are the remedies for a breach of duty?

Answer 126

• 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.

Question 127

What are the rights of an agent?

Answer 127

• 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.

Question 128

When does an Agent lose there right of indemnity?

Answer 128

• 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.

Question 128

p

Answer 128

p

Question 129

What are the two types of authority an agent can have?

Answer 129

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.

Question 130

What are the two forms of Actual authority?

Answer 130

• 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).

Question 131

Apparent (or ostensible) authority - when does this arise?

Answer 131

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.

Question 132

What is a disclosed principle?

Answer 132

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.

Question 133

What is needed for a statement to be false (misrepresentation)

Answer 133

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.

Question 134

What are the consequences if there is misrepresentation occurs which is either Negligent/ innocent or fraudulent?

Answer 134

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

Question 135

Why in insurance is there a positive duty of disclosure.

Answer 135

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.

Question 136

misrepresentation : What does ‘influence the judgment’
What questions must be answered to confirm the above?

Answer 136

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.

Question 137

Need there be a connection between the ‘missing facts’ and the
loss? (The ‘nexus’ question)

Answer 137

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.

Question 138

Material facts - what are material circumstances that concern Physical hazards?

Answer 138

• 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.

Question 139

Material facts - what are material circumstances that concern Moral hazards?

Answer 139

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

Question 140

What are matters, which are not needed to be disclosed?

Answer 140

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’

Question 141

How long is the duration of the duty of disclosure?

Answer 141

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.

Question 142

What is the Remedy for fraudulent claims?

Answer 142

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.

Question 143

the insurer has a remedy against the insured for a breach of the duty of fair presentation of the risk, only if the
breach is ‘qualifying’

What is classed as qualifying?

Answer 143

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)).

Question 144

What would happen if the insurer cannot show that it would not have entered into the contract on any terms but for the breach (in cases
where the breach is neither deliberate nor reckless)

Answer 144

*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

Question 145

Under the 2012 Act, the insurer can only seek remedy if misrepresentation is qualifying.
That is if:

Answer 145

• 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.

Question 146

With insurance polices, what must be agreed for acceptance to be effective?

Answer 146

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)

Question 147

What is the basic principle regarding the return of premium under insurance contract?

Answer 147

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.

Question 148

What are the Formal requirements of insurance contracts?

Answer 148

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.

Question 149

What are the key elements of insurable intrests?

Answer 149

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.

Question 150

Why does the law require insurable interest?

Answer 150

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

Question 151

What are the number of ways that an insurable interest may arise?

Answer 151

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.

Question 152

According tot the Marine Insurance Act 1906, when is does the insured need to be interested, with Marine insurance?

What does this mean?

Answer 152

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.

Question 153

What are the four major provisions of the Life Assurance Act 1774?

Answer 153

• 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).

Question 154

What are the two examples of insurable interest in the field of life insurance?

Answer 154

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

Question 155

What are the people who might have an insurable interest in property?

Answer 155

• 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

Question 156

Which has more serious consequences, breach of a warranty or breach of a condition?

Answer 156

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.

Question 157

Rules of construction which, in this context, simply means rules of interpretation - help solve disputes of a contracts wording.

Describe the Statutory rules?

Answer 157

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).

Question 158

Rules of construction which, in this context, simply means rules of interpretation - help solve disputes of a contracts wording.

Describe the Common rules?

Answer 158

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.

Question 159

What are the rules used, when there are inconsistencies with the policy wording?

Answer 159

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.

Question 160

What is a warranty?

Answer 160

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

Question 161

What happens when a warranty is not compiled with?

Answer 161

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.

Question 162

how are warranties made?

Answer 162

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.

Question 163

What are all the ways to classify a Condition?

Answer 163

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

Question 164

When can an insurer not reject an employers liability claim?

Answer 164

• 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.

Question 165

What must always be paid on a motor insurance policy?

Answer 165

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.

Question 166

What are the rules of breach policy conditions for joint and composite insurers?

Answer 166

• 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

Question 167

What is the difference between Joint and composite insurers?

Answer 167

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

Question 168

What are the rights for Rights under joint and composite policies

Answer 168

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.

Question 169

What did the Contracts (Rights of Third Parties) Act 1999 do?

Answer 169

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’.

Question 170

If there is a Trust what are distinct advantages?

Answer 170

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.

Question 171

What is a trust?

What would be a commercial trust?

Answer 171

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.

Question 172

Explain the statutory exceptions to the doctrine of privity of contract?

-Road taffic act 1988

Answer 172

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.

Question 173

Explain the statutory exceptions to the doctrine of privity of contract?

-Law of Property Act 1925

Answer 173

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.

Question 174

Explain the statutory exceptions to the doctrine of privity of contract?

-Fires Prevention (Metropolis) Act 1774

Answer 174

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.

Question 175

Does ‘Noting the interest’ of third parties, bring the Contracts (rights of Third party) Act 1999 into play.

Answer 175

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

Question 176

What are the rules that must be followed in regard to Notice and proof of loss?

Answer 176

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%)

Question 177

Who has the burden of proof?

How can you discharge the burden of proof?

Answer 177

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.

Question 178

What are the claims handling rules insurers are required to follow?

Answer 178

• 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

Question 179

Are there additional charges for late payments by the insurer, when paying a claim

Answer 179

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.

Question 180

Proximate cause - Concurrent interdependent causes, what happens if there is one cause which is uninsurable?

Answer 180

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.

Question 181

Can an insured recover from prevention costs?

(By this we mean, not damage to the subject matter itself, but expense incurred to prevent damage being caused to the subject matter by an insured peril.)

Answer 181

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

Question 182

What are the four types of Fraud, involved in claims?

Answer 182

• 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.

Question 183

What is the definition of fraud?

Answer 183

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

Question 184

What does the Fraud Act 2006 - note a person is guilty of the criminal offence of fraud if they?

Answer 184

• 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

Question 185

Who has the burden of proof to prove a fraud?

Answer 185

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’

Question 186

What are the remedies of insurer (for fraud)

Answer 186

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.

Question 187

Fraud - Personal injury – the Criminal Justice and Courts Act 2015 - what changed?

Answer 187

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.

Question 188

The Proceeds of Crime Act 2002 (POCA) - what is do?

Answer 188

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

Question 189

What are non-indemnity (or contingency) insurances?

Answer 189

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.

Question 190

What are the situations, in which an insured would receive less than a full indemnity?

Answer 190

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

Question 191

A claim under a policy of indemnity may be described as a claim for unliquidated damages.
What does this mean?

Answer 191

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.

Question 192

Property insurance - how is indemnity measured?

What is the general rule, for property insurance?

Answer 192

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.

Question 193

Property insurance - How do indemnity for building get calculated?

Answer 193

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’.

Question 194

What are the two forms of betterment?

Answer 194

• 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.

Question 195

Property insurance - How do indemnity for Machinery get calculated?

Answer 195

• 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.

Question 196

Property insurance - How do indemnity for Manufactures stock get calculated?

Answer 196

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.

Question 197

Property insurance - How do indemnity for Wholesale and retail stock get calculated?

Answer 197

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.

Question 198

Property insurance - How do indemnity for farmers stock get calculated?

Answer 198

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.

Question 199

How is indemnity different for Marine insurance

Answer 199

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.

Question 200

Can average operate as an implied term?

Answer 200

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.

Question 201

Methods of providing indemnity?

Payment of money.

Can the insured spend the money as they wish?

Answer 201

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

Question 202

What is the defemination of subrogation?

Answer 202

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

Question 203

Why does the law allow subrogation?

Answer 203

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’

Question 204

Does subrogation apply to non-indemnity polices?

Answer 204

No.

Question 205

When does The time when subrogation rights arise

Answer 205

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.

Question 206

Subrogation - if there is a surplus payment who get it?

Answer 206

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

Question 207

What is an Ex gratia payment?

Answer 207

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

Question 208

What is the definition of contribution?

Answer 208

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

Question 209

Contribution will arise only when the following conditions are satisfied:

Answer 209

• 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.

Question 210

The final court of appeal for a number of commonwealth countries is the

Answer 210

Judicial Committee of the Privy Council

Question 211

The rule in Rylands v Fletcher may apply when there is

Answer 211

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

Question 212

With regard to formation of a contract, consideration must always be a

Answer 212

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

Question 213

Adam had a contract with a specialist storage company to store some valuable paintings, but damp storage conditions resulted in damage to the paintings. Although Adam’s contract did NOT expressly state the storage requirements had to be suitable, he successfully sued the storage company on the basis that the contract terms were implied

Answer 213

C. in fact.

Question 214

life insurance policy would automatically be void for illegality if

Answer 214

there is no insurable interest at inception

Question 215

An insurance broker grants cover for motor insurance to a 21-year-old proposer. However, the broker’s authority is restricted to only granting cover to drivers aged 23 years and over. What basis, if at all, is the insurer bound to cover the 21-year-old?

Answer 215

Apparent authority

Question 216

Whilst Tim was on holiday, unknown to him his agent made a contract on his behalf. Tim is happy to ratify the contract but he does want to change a minor term. The services under the contract are scheduled to be carried out next week. What is the legal position regarding ratification of the
contract?

Answer 216

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

Question 217

Alice acted as an agent for Ted in a house clearance sale and has successfully claimed commission
by implied agreement. What does this indicate about the commission?

Answer 217

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

Question 218

In respect of consumer insurance contracts, the duty of utmost good faith means that the

Answer 218

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

Question 219

When applying for a household contents insurance policy, the proposer deliberately provided the
insurer with misleading information and so the insurer avoided the policy. In what circumstances, if
any, is the insurer obliged to return the premium to the policyholder

Answer 219

Retaining the premium would be unfair to the policyholder.

Question 220

Under English Law, the right to insure the life of another person arises if there is

Answer 220

a financial relationship recognised at law.

Question 221

Under English law, an element of statutory control over the wording of consumer insurance policies is imposed by the

Answer 221

Consumer Rights Act 2015.

Question 222

When an insured breaches a suspensive condition, for how long, if at all, is policy cover invalid?

Answer 222

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

Question 223

A clause in a company’s professional indemnity policy enables the insurer to avoid paying for any losses when an insured admits responsibility for the loss. This type of clause is

Answer 223

a condition precedent to liability.

Question 224

Harry owns a vintage car which he insures on an agreed value basis. An expert valuation was
accepted at inception. When the car was subsequently written off, why did Harry receive less than
indemnity?

Answer 224

The market value of an equivalent car had increased.

Question 225

When Fred’s yacht ran aground on rocks, but was NOT totally destroyed, he abandoned his rights to
the yacht to his insurer. However, he did NOT serve a formal notice of abandonment on the
insurer. If Fred submits a claim, the insurer is entitled to classify it as

Answer 225

a partial loss

Question 226

Tina has an insurance policy which contains a contribution condition known as an escape clause.
If she were to get another policy, which has overlapping cover, when would would the the original insurers NOT be to avoid the policy using the escape clause

Answer 226

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

Question 227

An insurer is entitled to make a profit following an insured loss when

Answer 227

the property is abandoned by the insured.

Question 228

Two liability policies with different insurers cover the same loss of £12,000. The limit of liability is
£20,000 under policy X and £40,000 under policy Y. Neither policy is subject to average or has a
non-contribution clause, but policy X is subject to a £4,000 excess. What amount will policy X
contribute towards the claim payment?

Answer 228

C. £4,800

(Independent liability of policy X/ independent liability of policy X+Y)* loss

(8,000/20,000)*12,000

Question 229

An insurer has paid a policyholder for fire damage to his home caused by an electrician’s faulty
work, less the policy excess. How should any subrogation action for damages be brought against
the negligent electrician and for what amount(s)?

Answer 229

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

Question 230

The UK Parliament consists of the

Answer 230

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

Question 231

A 17-year-old in full-time education can

Answer 231

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

Question 232

An insurer’s subrogation rights may arise

Answer 232

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

Question 233

A general partner in a limited partnership is a partner who has

Answer 233

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.

Question 234

A characteristic of a limited company is that

Answer 234

its activities are defined in the memorandum of association

Question 235

In negligence, what standard of care would be required of a newly-qualified electrician?

Answer 235

The standard for the electrical profession only.

–allowance for level of experience. is not taken into account.

Question 236

What is the common law remedy for the tort of nuisance?

Answer 236

General damages.

Question 237

After what period of time does an action for breach of a simple contract become statute-barred if the action is NOT in respect of personal injuries?

Answer 237

C. 6 years

Question 238

gratuitous promises is contractually valid and binding on the promissor when it is

Answer 238

in the form of a deed.

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

Question 239

An agent may be able to protect his rights to remuneration and indemnity by

Answer 239

exercising a lien on the principal’s property

Question 240

A secretary regularly books accommodation at a particular hotel on behalf of her employer. On one occasion, she also booked a hotel room for her husband and herself without her employer’s permission. What principle of agency law could make the employer legally liable to the hotel for
payment of the room charge?

Answer 240

Ostensible authority

Question 241

An agent for a disclosed principal commits the tort of deceit by knowingly making false statements to a third party. Who, if anyone, is legally liable if the third party suffers a financial loss as a result
of these statements?

Answer 241

Both the agent and the principal.

Question 242

Mia wishes to effect a life insurance policy on her husband’s life and also a policy on her adult son’s
life. What is the maximum sum insured, if any, legally allowable under each policy?

Answer 242

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

Question 243

In what type of contracts, if any, is the use of basis of the contract clauses legally permitted?

Answer 243

In neither consumer nor non-consumer insurance policies.

Question 244

What remedy is available to an insurer where a commercial policyholder has breached a collateral
condition concerning a minor matter?

Answer 244

Claim for damages.

Question 245

The basis of the burden of proof that a named insured peril was the proximate cause of the loss
falls upon the

Answer 245

policyholder to prove on the balance of probabilities

Question 246

What is the effect of a clause in an insurance contract that excludes losses directly or indirectly caused by acts of terrorism?

Answer 246

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

Question 247

A policy condition requiring the policyholder to give notice of a loss and also any incident or event which may give rise to a claim, is most relevant in an insurance policy covering

Answer 247

professional liabilities.

Question 248

What statute permits the third party victim of a motor accident to make a direct claim against the motor insurer of the negligent driver who caused the accident?

Answer 248

The Road Traffic Act 1988.

Question 249

If a policyholder wishes to take out a life insurance policy insuring their own life expressly for the
benefit of a third party, they can arrange this legally by

Answer 249

establishing a trust for the third party

Question 250

A fire destroys a business premises and the policyholder receives payment of the full sum insured
from his property insurer. If the new premises are rebuilt on the same site during the current policy
period, insurance for the premises will be arranged under

Answer 250

a new policy at new terms.

Question 251

It is usual for an insurer to insert a subrogation waiver clause into a contract to agree with a
policyholder that the insurer will NOT exercise subrogation rights against

Answer 251

subsidiary companies of the policyholder.

Question 252

The maximum liability method of calculating contribution operates, but with unfair results, if only
one of the relevant policies

Answer 252

is subject to a policy excess

Question 253

A persuasive precedent- what are they?

and who can set them?

Answer 253

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

Question 254

Persuasive precedents - what are they?

Answer 254

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.

Question 255

Which torts are actionable per se?

Answer 255

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

Question 256

Which rules apply to deal with issues regarding inconsistencies or contradictions in policy wordings?

Answer 256

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.

Question 257

With an insurance contract - what must be agreed?

Answer 257

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).

Question 258

Does a premium needed to be paid straight away for cover to be on?

Answer 258

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.

Question 259

What are the rules regarding the Return of premium under insurance contracts

Answer 259

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

Question 260

Is there a requirement for any type of insurance contract to be in the form of a deed ?

Answer 260

No.

The only type of insurance contract which must be in writing is a marine insurance policy (Marine Insurance Act 1906, s.22).

Question 261

Do Policies on goods have a statutory requirement of insurable interest

Answer 261

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).

Question 262

Gambling Act 2005 - what is it?

Answer 262

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

Question 263

Effect of a policy without interest - what are they?

Answer 263

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’).

Question 264

Life insurance e- Which family relationship have an insurablbe interest on you?

Answer 264

1) Own life

2)Spouses

— No one else does

Question 265

Life insurance e- Which Business relationship have an insurable interest on you?

Answer 265

1) Partners

2) Employer and Employees

3) creditors and debtors.

Question 266

Can gifts be deemed by way of subrogation?

Answer 266

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.

Question 267

When is subrogation actioned by the insurer, who’s name must it be brought in?

How much of the loss should this be for?

Answer 267

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

Question 268

Subrogation, Salvage and abandonment

Answer 268

• 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.

Question 269

Escape clause

Answer 269

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.

Question 270

Contribution - What is the Maximum Liability method?

Answer 270

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

Question 271

Contribution - independent liability method

Answer 271

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.

Question 272

What happens if a warranty is not complied with?

Answer 272

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

Question 273

What is a Lein?

What rights does a Linor have?

When does a Lien come to an end?

Answer 273

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.

Question 274

Trespass to goods

When would an action be classed as a conversion, and not a trespass?

Answer 274

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.

Question 275

Agency by agreement - define the ways an agent is appointed

Answer 275

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.

Question 276

Define an agency by ratification.

What type of insurance is able to ratify after a loss

Answer 276

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

Marine

Question 277

What are the consequences of acting negligently when an agent is carrying out a task

Answer 277

• 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.

Question 278

What is Imputed knowledge, and its consequences.

what does the law assume?

Answer 278

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.

Question 279

What are the two types of authority an agent can have?

Answer 279

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.

Question 280

Express actual authority what is it?
what are the implications if there is ambiguity

Answer 280

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

Question 281

implied actual authority - what is it? and what is usually know as?

Answer 281

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

Question 282

Apparent authority - What is the danger

Answer 282

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.

Question 283

What is agency by estoppel

Answer 283

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

Question 284

What is/occurs if the principle is disclosed?

Answer 284

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.

Question 285

Disclosed principle - what are the exceptions for agents, and their lability

Answer 285

• 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

Question 286

• Can the undisclosed principal enforce the contract?

Answer 286

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

Question 287

What is an undisclosed principle

Answer 287

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

Question 288

Undisclosed principle: Can the third party enforce the contract and, if so, against whom?

Answer 288

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

Question 289

What are the expectations placed on a undisclosed principle

Answer 289

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).