chapter 7 Flashcards
(42 cards)
What is a “term” in a contract?
A: Any provision forming part of a contract that imposes a legal obligation; breach of it leads to remedies.
What are the three types of terms in insurance contracts?
A: Express, implied, and oral terms.
In general contract law, which is more serious: breach of condition or breach of warranty?
A: Breach of condition—permits contract termination and damages.
Warranty breach allows only damages.
How do ‘conditions’ and ‘warranties’ differ in insurance law from general contract law?
A: Their meaning and remedies differ; the label doesn’t solely determine the remedy in insurance due to IA 2015 s.11.
When does IA 2015 s.11 not apply in insurance contracts?
.
A: When the term is a claim provision (e.g., condition precedent to insurer’s liability)
Why must insurance policies be precisely drafted?
A: To define clearly what is covered and excluded, ensuring no ambiguity or inconsistency.
What does the CRA 2015 prohibit regarding contract terms?
A: Terms that unfairly exclude/restrict liability for death or personal injury due to negligence.
When can a consumer challenge a contract term under CRA 2015?
A: When it causes a significant imbalance contrary to good faith, even if individually negotiated.
What is the “literal rule” used in contract interpretation?
A: Courts give words their ordinary, everyday meaning.
What does the “noscitur a sociis” rule mean?
A: A word is understood by the context of surrounding words.
What is the “ejusdem generis” rule?
A: General words following specific ones are limited to the same type as the specific words.
Define “expressio unius est exclusio alterius.”
A: Naming specific items excludes others not named.
What is the contra proferentem rule?
A: Ambiguities in a contract are interpreted against the party who drafted it (usually the insurer).
In insurance contracts, what takes precedence if handwritten terms conflict with printed ones?
A: Handwritten terms take precedence because they are seen as specific to the parties’ agreement and override standard printed wording.
What is a “suspensive condition” in an insurance contract?
A: A suspensive condition temporarily suspends cover during non-compliance, but cover resumes once the condition is fulfilled again.
Under the IA 2015, what is the effect of a breach of a warranty that is later remedied?
A: Cover is suspended during the breach but resumes once the warranty is remedied. The insurer is not liable for losses occurring or attributable to the breach period.
When might the term “warranty” in an insurance policy not actually be treated as a warranty by the court?
A: If the term does not materially affect the risk or go to the root of the contract, the court may interpret it as an exclusion or another type of term.
what does the principle “expressio unius est exclusio alterius” mean in the context of insurance interpretation?
A: Specifying certain items implies that anything not listed is excluded from the contract’s scope.
What does the IA 2015 require before an insurer can avoid liability for a loss that occurs after a warranty breach is remedied?
A: The insurer must show the loss is attributable to something that happened during the breach, but not necessarily the proximate cause.
How can an insurer waive its right to avoid a policy for breach?
A: By affirming the contract through action (e.g. paying a claim) or remaining silent for an extended time after discovering the breach.
What distinguishes a condition precedent to the contract from a condition precedent to liability?
A: The former prevents the contract from forming if unmet; the latter discharges the insurer’s liability for a specific claim if breached.
Under the Consumer Rights Act 2015, when is a contract term considered unfair?
A: If it causes a significant imbalance in the parties’ rights and obligations, contrary to good faith, to the detriment of the consumer.
What rule allows a court to interpret ambiguous insurance policy wording in favour of the insured?
A: The contra proferentem rule, applied when ambiguity exists and multiple reasonable interpretations are possible.
How does the meaning of “warranty” in insurance differ from general contract law?
A: In insurance, a warranty is a condition that must be exactly complied with, or cover is suspended; in general law, it’s a minor term where only damages are awarded.
