Contract Law Flashcards
Consideration
something of value that each party gives to the other (binding force in any contract)
Fraud
intentional misrepresentations or deceit with the intent to induce a person to part with something of value
Insurance Policy
a contract between a policyowner and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
Lapse
policy termination due to nonpayment of premium
Misdemeanor
a minor criminal offense, considered less serious than a felony
Unilateral Contract
a contract that legally binds only one party to contractual obligations (one-sided)
Contracts
are written agreements that are legally enforceable by law.
Tort
s a private, civil, noncontractual wrong for which a remedy through legal action may be sought.
4 elements of a contract
Agreement, competent parties, legal purpose, and consideration
Insures consideration
promise to pay for losses
Insured consideration
premium and statements on applicaiton
Contract of adhesion
prepared by one of the parties (insurer) and accepted or rejected by the other party (insured).
Conditional contract
requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligations.
Aleatory
there is an exchange of unequal amounts or values.
Personal contract
it is between the insurance company and an individual.
Material misrepresentaion
lying from what was stated on contract
Intentional misrepresentation
lead to fraud
Expressed and implied warranty
materiality
based on the idea that all parties to a contract are entitled to all information necessary to make an informed decision about the quality or nature of the contract.
Concealment
intentional withholding of information of a material fact that is crucial in making a decision.
Rescission
terminate contract
6 idenitifers for insurance contract
The parties to the contract;
The persons or property being insured;
A statement of the insurable interest that exists if the insured is not the owner;
The risks insured against;
The time period during which the policy will be in force or continue; and
The stated annual, semi-annual, quarterly, or monthly premium or a statement of the manner in which a premium rate and total premium will later be calculated, if it can only be determined at the termination or expiration of the contract.
Riders
Riders are added to a policy to modify provisions that already exist (usually used in Life and Health insurance).
Endorsements
printed addendums to a contract that are used to change the policy’s original terms, conditions, or coverages (usually used in Property and Casualty insurance).
