unit2

Question 1

what 5 elements must be present to form a valid legal contract?

Answer 1

CLOAC
Consideration
Legal purpose
Offer
Acceptance
Comptent Parties

Question 2

meaning or consideration

Answer 2

exchange of value. each party gives something of value.

Question 3

Meaning of legal purpose

Answer 3

doesn’t violate the law

Question 4

acceptance of an offer must be what two things?

Answer 4

unconditional and unqualified

Question 5

requirements for a binding contract?

Answer 5

competent parties, and legal age

Question 6

Aleatory

Answer 6

not equal in value

the value received from the contract by each party is unequal due to uncertainty of events.

Question 7

what is meant by utmost good faith

Answer 7

both parties promise to be honest.

Question 8

meaning of indemnification

Answer 8

restore an insured person to their pre-loss financial state

Question 9

indemnity

Answer 9

pay for the loss with no gain . no more, no less

Question 10

what is a representation?

Answer 10

a statement that the applicant believes to be true.

Question 11

what are representations?

Answer 11

statements made on an application by the insured

Question 12

what is a material misrepresentation?

Answer 12

false information that was a determining (or material) or factor in the insurer’s decision to accept the risk

Question 13

in order to void a contract misrepresentations must be what?

Answer 13

material (determining factors for insurer in deciding to accept risk)

Question 14

misrepresentation

Answer 14

information given that is not true but would not affect the insurance company decision.

Question 15

what is a warranty

Answer 15

statement guaranteed to be true. usually made by insurance companies. they are made in the form of a promise

Question 16

concealment

Answer 16

failure to disclose known facts

Question 17

coverage can be cancelled due to what type of concealment?

Answer 17

intentional, and the info is material (important)

Question 18

what is fraud?

Answer 18

intentional act to deceive and induce another party to part with something of value

Question 19

waiver

Answer 19

intentional and voluntary giving up of a known right

Question 20

estoppel

Answer 20

once a right has been waived it cannot be reinserted and used against the insured

Question 21

3 factors of Adhesion

Answer 21

• Policy written by the insurance company.
• Contract is like glue.
• Insured has no input.

Question 22

Unilateral

Answer 22

only one legally enforceable promise made. insurer can cancel at anytime

Question 23

two conditional factors is a loss occurs

Answer 23

1. insured must pay premium

2. claim must be filed