Study 6 Key Terms Flashcards
Define agreement
Where two or more persons come to a mutual understanding with respect to their rights and duties.
Define void contract
An illegal contract. In the law, a contract that was never made or never existed. For example, one cannot enter into a contract to commit an illegal act like theft and have it stand up in court. Such a contract is considered a void contract.
Define consideration
The value received to bind a contract. It is an essential part of a binding contract. Consideration is either expressed or implied. The money, or whatever is being used in substitution of money, paid for the article or contract is “the consideration.”
Define capacity to contract
Parties must be legally able to enter into contracts. This means that the person must be able to enter into a legal agreement and perform some act. The person must be of sound mind.
Define lesion
Occurs when the minor cannot financially afford the object of the contract even though the price is fair, or when the minor can afford it but the object is overvalued, or when the minor cannot afford an overvalued object. The challenge can only be raised by the minor; it is binding on the other party, who cannot cancel at his or her own discretion. There are some instances where the minor cannot use this defence.
Define tutor (or curator)
Person who is the legal guardian of another person.
Define insured
Any person (including a corporation) covered by an insurance policy. In some policies, the term may be defined exhaustively to limit the coverage or defined broadly to expand coverage. See also named insured.
Define insurer
The insurance company that undertakes to indemnify for losses and perform other insurance-related operations.
Define insurable interest
An interest that the insured must have in the subject matter of the insurance purchased so that if the event insured against occurs, the insured will suffer a pecuniary loss.
Define bailee
In contract and property law, one to whom goods or property are entrusted for a stated purpose. Can be either gratuitous (for no consideration) or for hire (for consideration).
Define indemnity
A contract, expressed or implied, to repay in the event of a loss. The insured neither gains nor loses.
Define deductible
An agreed specified amount that the insured must pay on a claim before the insurance company will cover the rest of the claim. This amount is agreed upon by both the insurer and the insured. An insured’s obligation to pay a deductible is not based on whether he or she is at fault.
Define actual cash value (ACV)
The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways:
(1) cost to repair or replace less depreciation;
(2) fair market value; or
(3) consideration of all relevant evidence of the value of the damaged property.
Define depreciation
The reduction in value of property through use, aging, deterioration, or obsolescence.
Define replacement value
The current market value of the cost to replace the lost or damaged insured property.
