Elements of a contract
What are the four main elements of a valid contract?
1. Intention to create a legal relationship
2. There must be Offer & Acceptance
3. Consideration
4. Capacity to contract
What does "Vitiating Factors" mean in contract law?
Factors that affects the validity of a contract
What is the role of an agent in an insurance contract?
An agent is a person who has the authority or power to act on behalf of his principal.
Name two ways an agency can be created?
- Express agreement
- Implied agreement
What is waiver?
Waiver is defined as the voluntary relinquishment of a known legal right.
What does "Consideration" mean in contract law?
When a party promises to do certain thing(s) under a contract, he is called the promisor.
In giving the promise, the promisor must receive something in return, and what he receives for the promise is called consideration.
Is Misrepresentation Void or Voidable?
Voidable
Who is the principal in an agency relationship?
The party who gives authorised the agent to act on their behalf
What's the difference between Express agreement and Implied agreement?
- Express agreement is clearly stated - written or verbal.
- Implied agreement is not directly stated, but understood through actions or conduct
What is Estoppel?
Estoppel means that, if one person makes a statement to another person who then relies on the statement to his damage, the first person cannot later deny the statement was made.
Who lacks the capacity to contract under the law?
- Minors
- Persons suffering Legal Disability
- Undischarged Bankrupts
Describe Duress
A contract is formed by mutual consent of the parties.
If a party is under coercion to consent, the contract may not be valid,
as the consent given is not genuine.
Who is the third party in an agency relationship?
Any person, other than the principal and the agent, may be referred to as a third party in the context of an agency. They are usually the other side of the contracting party.
What's "Renunciation by an agent"?
The agent can choose to revoke the agency agreement by resigning any time.
What are the responsibilities of an insurance agent when a client informs them of a potential claim?
The agent must immediately notify the insurer, advise the insured on claim submission requirements, and pass all information to the insurer without delay. The agent must not admit or deny liability, or make any promises, unless instructed in writing by the insurer.
Can a 16 year old enter into an insurance contract?
No such consent is required for a person who is 16 years old or above. They may enter the contract of insurance on their own.
Describe "non est factum"?
person who is not a person under any incapacity signs a contract, he will be bound by the contract whether he has read it or not. However, if he could show that the document which he signed was not the one he intended to sign and the mistake was not due to his carelessness, he might be able to avoid the contract on the ground of non est factum .
What happens when an agent acts within their authority?
Contracts which are entered into by an agent within his authority will be binding/liable on the principal, as if entered into it by the principal himself
Describe the "Offer and Acceptance" process in insurance
The insurer may quote a premium based on information supplied in the proposal form and, in doing so, the insurer makes a counteroffer which the proposer may then accept or decline.
How is a "mistake" treated in contract law?
Reaching an agreement without knowing that the facts did not exist, or not knowing the existence of certain facts. Their consent is mistaken and therefore treated as if it had not existed at all.
When can an agent lose their entitlement to protection (Indemnity against principal)?
if the losses or liabilities arise in consequence of the agent’s breach of duty, negligence, default or insolvency, or if his actions were unauthorised (unless subsequently ratified by the principal), or in respect of actions which he knew or should have known were unlawful.