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Module 4

James Lucas

on 24 October 2012

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Transcript of IF1

IF1 Skills Solutions An agent has the following duties to their principal:-
Personal Performance
Due Care & Skill
Good Faith
Accountability Skills Solutions An agency may be terminated in a number of ways:-
by mutual agreement by the principal and the agent
by the agency being withdrawn by the principal or given up by the agent (the agency being terminated)
by the death, bankruptcy or insanity of either party. Skills Solutions A principal has the following duties to their agent:-

Indemnity Skills Solutions An independent intermediary is considered to be an agent of the insurer when:-
It handles proposal forms on behalf of the insurer and confirms cover.
It surveys and describes the property on the insurer’s behalf
It has the authority to collect premiums and does so Skills Solutions An independent intermediary is acting on behalf of the insured when:-

Giving advice on cover or the placing of insurance
Giving advice to the insured on how to make a claim Skills Solutions Question Time Skills Solutions English law permits an agent to act for an undisclosed principal, whilst seeming to act on their own behalf. Skills Solutions This arises where a person is entrusted with someone else’s goods and it becomes necessary to act in a certain way in order to protect the property in an emergency. Skills Solutions This is the most usual way of creating a relationship.
Both parties enter into a legally enforceable agreement.
Also known As EXPRESS APPOINTMENT Skills Solutions Consent
Apparent Authority
The application of the ‘undisclosed principal’ rule Skills Solutions Fulfilment
The total loss of the subject matter

Voidable Contracts
Where there has been a failure to comply with a policy condition Skills Solutions Most general insurance policies have a cancellation condition
Letter must be sent to the insured’s last know address - normally giving 14 days notice
Pro-Rata return premium for the insured Skills Solutions Normally Insurance Contracts are expected to run until their expiry date
Motor / Home - Renewable Annually
No obligation for the Insurer to offer renewal terms however Retail & Commercial customers should be advised in ‘good time’ that cover will expire and renewal is not being offered. Skills Solutions Contracts must be supported by CONSIDERATION to be valid.
Each person’s side of the bargain which supports the contract.
These promises and actions are the consideration
Payment of Money
Promises to do something in return for something Skills Solutions The general rule is that the contract is made when the acceptance is received by the person making the offer.
If the POST is the agreed method of communication, then acceptance is said to be complete at the point when the letter is posted.
This applies even if the letter is delayed / lost / destroyed An agreement must satisfy certain criteria to ensure that a valid, enforceable contract is formed.

Consideration Applying the definition to insurance...
An insurance contract is an agreement, between insurer and insured;
The insured agrees to pay a premium to the insurer and abide by the terms and conditions of the policy;
The insurer agrees to pay to the insured a sum of money or something of monetary value, on the happening of a specified event. In this module we will learn about: -
The definition of a contract
The essentials of a valid contract
How insurance contracts can be terminated
The legal meaning of the term agent
How agencies can be created
The relationship between the agent, the insurer and the insured
How agencies can be terminated
The duties of an agent
The duties of a principal CONTRACT & AGENCY

James Lucas Skills Solutions We have now learnt about: -
The definition of a contract
The essentials of a valid contract
How insurance contracts can be terminated
The legal meaning of the term agent
How agencies can be created
The relationship between the agent, the insurer and the insured
How agencies can be terminated
The duties of an agent
The duties of a principal Skills Solutions
This refers to a situation when an agent acts outside the terms of the agency agreement, but the principal accepts the act as having been done by the agent on their behalf. Skills Solutions If an agent appears to the third party, with reason, to have authority, this can create a binding contract, even if the authority had not actually been given to the agent. Skills Solutions In law an AGENT is one who is authorised by a principal to bring the principal into a contractual relationship with another, a third party.
In law, everyone who acts on behalf of another person is an AGENT. Skills Solutions Less common for insured to have cancellation rights.
Normally Short Period Rates
Motor Insurance - need the certificate back (or Lost Certificate Declaration) If new terms are introduced, the so-called acceptance becomes a new offer (counter-offer) which is then open to be accepted or rejected by the person who made the original offer.
A contract is not formed if the offer is not unconditionally accepted.
A counter-offer operates as a rejection of the original offer. A contract comes into existence when one party makes an offer, which the other accepts UNCONDITIONALLY.

To be effective, acceptance must be the final and unqualified agreement to the offer. “An agreement, enforceable by law, between two or more persons to do, or abstain from doing, some act or acts, their intention being to create legal relations and not merely to exchange mutual promises”
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