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Flashcards in CH 3 CONTRACTS AND AGENTS Deck (64)
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1

What is Contract Law defined by Smith and Keenan's English Law

This is an agreement, enforceable by law between two or more persons, to do or obstain from doing some act or acts, their intention being to create a legal relation and not merely to exchange mutual promises

2

What is an insurance contract

This is an agreement enforceable by law between insurer and insured.The insured will agree to pay a premium to the insurer and abide by the terms and condition. In return the insurer agrees to pay the insured a sum of money or something of monetary value, in the happening of a specified event

3

What elements are essential for a contract to be valid

The Main ones are Offer and Acceptance and Consideration
Other important elements include
1.Intention to create legal relation
2.Capacity to Contract
3.Geniune meeting of minds
4.Legality of purpose
5.Possibility of Performance
5. Certainty of terms

4

How must all parties in an insurance contract act

They must act in Good Faith

5

When does a contract exist

When one party makes an offer the other party accepts unconditionally

6

What are the three types of acceptance of an insurance contract

1.Unconditional Acceptance
2.Conditional Acceptance
3.Postal Acceptance

7

What does a counter offer act as

Counter Offer operates as a rejection of the original offer

8

How does Postal Acceptance Work

Contract is made when the acceptance is received by the offeror(the person making the offer), at the point when the letter of acceptance is posted.
The rule applies even when the letter is lost/destroyed/delayed

9

what is void ab initio, and when is a contract legally said to be void ab initio

void ab initio means void from the beginning, this happens when a contract is declared invalid or set aside if its missing any of the essential elements to a valid contract

10

According to Currie Vs Misa(1875) what is consideration

Some right, interest, profit or benefit accruing to one party or some forbearance, detriment loss or responsibility given, suffered or undertaken by the other

11

simple description of Consideration

Each person's side of the bargain which supports the contract

12

What is the common but not the only form of consideration for one party

Payment of Money

13

What does the fair treatment of customers principle and ICOBS imply for the insurer to do

It implies the insurer to alert the customer to the fact that the cover will expire soon

14

New Regulatory rules introduced by the FCA in April 2017 requires insurers and intermediaries to

1.disclose previous year's premium on renewal notices
2.include a text to encourage consumers to check their cover and shop around for good deals each renewal
3.identify consumers who have renewed for four consecutive times, and give them additional prescribed notice encouraging them to shop around

15

Most General Insurance polices have a cancellation condition,if the insurer invokes this cancellation what is the insured entitled to

The Insured is entitled a pro rata return premium,representing the unexpired part of the risk

16

When an insurer cancels cover, what are they required to send to the insured

they are required to send a letter to the last known address of the insured, they could give 10/14/30 day's notice of cancellatio

17

A consumer has the right to cancel their policy without penalty within and giving reasons for most insurances purchased at a distance, how many days

They must exercise their rights within 30 days for payment protection contract or 14 days for any other

18

which policy can the insurer not charge an amount for when cancelled

a payment protection contract

19

For face to face purchased insurance, policyholder can cancel cover but

The insurer is entitled to charge for cover already provided at their short period rates

20

As with any other contracts, termination can result from

1. Fulfillment
2.Voidable Contracts
3.Breach of Warranty
4. Fraudulent acts

21

Fulfillment

This means total loss of the subject matter

22

Voidable contracts

This may arise under insurance policies, where the insured is in breach of a policy condition that places a continuing requirement upon them.If insured fails to do so the insurer may treat the policy as void. If insured does no have insurable interest contract is voidable

23

An example of a voidable contract

Where the insured is required to maintain equipment in efficient working order and they fail to do so

24

When can the insurer have a right to avoid paying particular claim, but the policy will remain in force

When the insured fails to fulfill a condition relating to a claim

25

When can an insurer avoid contract entirety setting aside ab initio

This can arise as a consequence of non-disclosure or misrepresentation of information by the policyholder

26

Breach of Warranty

Leads to the automatic discharge of insurer's liability without the need to terminate the contract

27

What is a warranty

According to the Marine Insurance Act `1906,is a term in insurance contract that must be exactly and literally complied with by insured whether material to the risk or not. Departure from the requirement is reason for breach

28

What change on breach of Warranty did the Insurance Act 2015 bring about

Breach of Warranty no longer automatically terminates the contract, Insurer will not be liable for losses occurring during the time of suspension but will be liable for losses occurring after breach has been remedied

29

Under the Insurance Act 2015,what rights can insurers exercise in case of fraudulent acts

Insurers can elect to terminate an insurance contract with effect from the time of fraudulent act without return of premium

30

When a fraudulent claim is made, insurer

1.is not liable to pay claim
2.can recover any amounts already paid for the claim
3.can choose to terminate contract from the date of fraudulent act