Module 3 Flashcards
When does a contract come into force if the acceptance is posted?
A. On the date of posting
B. On the date of receipt
C. 10 days after posting
A. On the date of posting
Each persons side of the bargain eg. the policy holder paying the premium and the insurer promising to pay any insured losses is known as their….
A. Promise
B. Obligation
C. Consideration
C. Consideration
Hugo offers to sell his boutique business to Michael for £200,000. Michael responds with a counter-offer of £150,000 which Hugo refuses. Michael then says that he will pay the original asking price of £200,000.
Do you think that Hugo is contractually obliged to accept Michael’s revised offer?
A. Yes
B. No
B. No - For a contract to be effective, one party must make an offer which the other party accepts unconditionally.
Hugo decides to accept Michael’s new offer of £200,000 for the boutique. As agreed, he writes a letter of acceptance to Michael which he posts on 15 May. Michael receives Hugo’s acceptance letter on 18 May.
When is the acceptance effective and the contract officially ‘made’?
A. 15th May
B. 18th May
C. 19th May
A. 15th May
An agent acts on the behalf of the
A. Client
B. Insurer
C. Principal
D. Loss adjuster
C. Principal
What does an agent do?
A. Advises consumers on insurance matters
B. Helps negotiate claims disputes
C. Brings about a contract between the principle and a third party
C. Brings about a contract between the principle and a third party - For example an independent intermediary (the agent) arranging cover for its client (the principal) with an insurance company (the third party).
Michael hires an independent agency to scout the market and purchase the best available stock lines for his new boutique venture.
The agency purchases some stock from an online retailer on Michael’s behalf with payment due in 30 days.
If payment is not made on time, who do you think is liable?
A. Michael only
B. The agency only
C. Both Michael and the agency
A. Michael only
Both parties enter into a legally enforceable agreement. It is by far the most common method used in insurance. This is an example of:
A. Agency by necessity
B. Agency by ratification
C. Agency by consent
C. Agency by consent
This arises where someone is entrusted with someone else’s goods and it becomes necessary to act in a certain way to preserve the property in an emergency. This is an example of:
A. Agency by necessity
B. Agency by ratification
C. Agency by consent
A. Agency by necessity
This refers to a situation where an agent acts outside the agency agreement terms, but the principal accepts or ‘ratifies’ the act as having been done on their behalf after the event. This is an example of:
A. Agency by necessity
B. Agency by ratification
C. Agency by consent
B. Agency by ratification
Michael asks Russell, his local insurance broker, to arrange insurance for his new boutique. Russell approaches insurer, XYZ plc, and the insurer asks him to carry out a survey of the property on its behalf.
Would you say that Russell was acting as:
A. Michael’s agent at all times
B. XYZ’s agent at all times
C. An agent for both parties at different times
C. An agent for both parties at different times
Brian appoints Lisa as his agent to sell various items of his property. Lisa gets slightly carried away with the task, and sells a fridge to Ben for half the price he was instructed to sell it for.
Would you expect Lisa to be liable to Brian for the price difference?
A. Yes
B. No
A. Yes
Brian asks Millie to sell some antique vases for him through her artist’s studio. No specific mention is made of commission being payable and when Brian receives some sale proceeds from Millie, he refuses to meet her demand for 25% of these proceeds by way of commission.
If the dispute proceeds to a civil court hearing, what outcome would you expect?
A. Millie will automatically be awarded her 25% commission
B. Millie will be awarded a reasonable commission
C. Millie will receive nothing because no formal agreement existed
B. Millie will be awarded a reasonable commission
Luke owns a tool shop, he hires an independent agency to scout the market and purchase some tools for his tool shop and the payment is due in 60 days. If the payment isn’t made on time. Who do you think is liable?
A. The agency
B. Luke and the agency
C. Luke
C. Luke
What are the four main duties of an agent to their principal?
A. Keeping promises
B. Obedience
C. Customer service
D. Claims handling
E. Due care and skill
F. Personal performance
G. Accountability
A. Keeping promises
E. Due care and skill
F. Personal performance
G. Accountability
