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Flashcards in Contracts Deck (20)
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1

Elements of a legal contract

an offer, acceptance and consideration

2

The amount paid at the inception of an insurance contract

Initial premium

3

An offeree who wants to accept an offer must:

Abide by any stipulations in the offer & accept every term of the offer.

4

Something of value that both parties give to form the contract. ie: a contract for sale and purchase of property involves: a sum of money (consideration extended to buyer) IN EXCHANGE FOR the property (consideration extended by the seller)

Consideration

5

To be considered legally competent, a person must be:

mentally sound, not under the influence and of legal age.

6

Insurance contract characteristics:

Contracts of adhesion, aleatory, personal, unilateral and conditional.

7

A contract drafted by one party and is offered on a "take it or leave it" basis. The other party has little chance to bargain terms or price.

Contracts of Adhesion

8

Contracts that involve an exchange of unequal amounts, specifically unequal transfer of value between the parties.

Aleatory Contracts

9

When only one party makes an enforceable promise. Only the insurer makes a promise that can be enforced.

Unilateral Contract

10

Contact where the force and effect and often it's continuation, depend on certain actions of the policyholder.

Conditional Contacts

11

The insured's recovery under an indemnity policy cannot be larger than either the actual loss sustained or the amount of insurance.

Indemnity Contract

12

The insurer agrees to pay a specified amount of money when event occurs regardless of value. ie: life insurence.

Valued Contracts

13

Property insurance provision that suspends the coinsurance clause until a specified expiration date. Previously referred to as an agreed amount clause

Agreed Value

14

The insured relies on the insurance company to fulfill its promises. The insurance company also expects that the insured will not misrepresent the facts or conceal information when applying for insurance or presenting a claim.

Uberrimae Fidae OR Utmost Good Faith

15

A statement made at time contact was formed. Statement persuades a party to enter into the contract.

Representation.

16

Info that would affect an insurer's underwritting or claim settlement decision.

Material Fact

17

Deliberate withholding of material facts. ie: auto applicant does not disclose frequent seizures.

Concealment

18

Guarantees that something is true and always will remain true. ie: jewelry store owner stating that a alarm will always be in use. Otherwise claim may not be paid.

Warranty

19

When a party cannot enforce a right that it has voluntarily waived by it's past conduct. Not able to deny claim for late payment if accepted late payments in the past.

Estoppel

20

When the party voluntarily gives up a right that the party knows he or she holds. ie: insurance company may not be able to terminate policy if regularly accepts late payments but now policy is up for renewal.

Waiver