Key Facts Q's

Question 1

What is an invitation to treat?

Answer 1

means that one party is willing to invite an offer

Question 2

Can an offer be accepted by doing nothing?

Answer 2

No, an offer cannot be accepted by doing nothing

Question 3

What must be agreed on within an insurance contract?

Answer 3

• The nature of the risk and subject matter of insurance
• Duration of the contract
• The amount of premium

Question 4

How can a third party enforce a contract?

Answer 4

• The contract provides that they may do so
• The contract purports to confer a benefit on the third party

Question 5

What law brought about change for the common law doctrine of privity of contract

Answer 5

Contracts (Rights of Third Parties) Act 1999

Question 6

What is assignment?

Answer 6

A legal assignment to an insurance contract

Question 7

How can ‘trusts’ claim on an insurance contract

Answer 7

Sometimes a person who insures is deemed to have established a trust for the benefit of a third party, who can enforce the policy. This arises frequently in the field of life insurance where a person insures their own life but does so
expressly for the benefit of another

Question 8

What four laws are exempt from the privity of contract?

Answer 8

• Road traffics act 1988
• Third Parties Act 2010
• Law of property act 1925
• Fires prevention act 1774

Question 9

How does an insured discharge the burden of proof?

Answer 9

• The loss was covered by an insured peril
• the amount of loss

Must be established by the insured on the balance of probabilities.

Question 10

What are the ICOBS rules for handling insurers claims?

Answer 10

• 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 11

What are the damages for late payment by an insurer?

Answer 11

allows the court to award damages for
late payment where the insurer has acted unreasonably.

Question 12

What is causation?

Answer 12

What causes a claim

Question 13

What problems can arise around causation?

Answer 13

• In some cases it may be difficult to separate the effects of a peril which is insured (e.g. fire), from the operation of another peril which is excluded (e.g. earthquake)
• In other cases the operation of a peril that is insured (such as fire) may result in damage of a different sort (e.g. damage by smoke, or water used to put out the fire, or looters who take advantage of the chaos in order to steal).

Question 14

What happens if one insured and one uninsured peril are competing?

Answer 14

The insured peril prevails, however it it competes with an excluded peril the excluded peril prevails

Question 15

Who is the burden of proof on?

Answer 15

The insured

Question 16

What are the four types of fraud involved in claims?

Answer 16

• Falsification of loss - no loss suffered
• Deliberate loss - on purpose
• Exaggeration of loss
• Lying about circumstances of a genuine loss

Question 17

What is meant by the ‘fraudulent device’ defence?

Answer 17

fraudulent statements that increased the chances of the claim being paid out.

Question 18

What is a remedy for an insurer for confirmed fraud?

Answer 18

• 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

Question 19

What is a contract under seal?

Answer 19

A contract under seal (or special contract or contract by deed) is a formal contract which is in writing and is witnessed, and which originally had to be sealed and delivered.

Question 20

What are all other contracts known as?

Answer 20

Simple contracts

Question 21

What is the difference between a unilateral contract and a bilateral contract?

Answer 21

A unilateral contract is only bound to one body whereas a bilateral contract is bound to both.

Question 22

What is promissory estoppel?

Answer 22

Within contract law, promissory estoppel refers to the doctrine that a party may recover on the basis of a promise made when the party’s reliance on that promise was reasonable, and the party attempting to recover detrimentally relied on the promise.

Question 23

What are the three ways a term may be implied?

Answer 23

• In fact
• By custom or usage
• In law

Question 24

What two pieces of law contain the most restrictions on the effectiveness for exemption clause

Answer 24

• Unfair contract terms act 1977
• Consumer rights act 2015

Question 25

What is the difference between a warranty and a condition?

Answer 25

• a Warranty affects only some relatively minor aspect of the agreement.
• A condition relates to an important aspect of the agreement: it goes to the root

Question 26

Where do defective contracts result from?

Answer 26

• Illegality
• Improper pressure
• Mistake
• Misrepresentation
• Non-disclosure

Question 27

How does illegality arise in an insurance contract?

Answer 27

• No insurable interest
• Purpose of contract is illegal
• Unlawful use of insured property
• Close connection with crime

Question 28

What is improper pressure?

Answer 28

Improper pressure is when a person has been led into a contract forcefully

Question 29

What three types of mistake are common for a defective contract?

Answer 29

• Mistake regarding the subject matter of the contract
• Mistake as to the identity of the other party
• Mistakes in recording agreements - rectification