Contract of insurance

definition In the case of Lakshmi Insurance Co.Ltd. Vs. Bibi Padma Wati,(1961) it was held- A contract of insurance in its nature aleatory, voluntary, executory, synallagmatic, conditional and personal except as to life and accident that is one of indemnity.

CONTRACT OF INSURANCE S-10 of the contract Act-1872- All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Essentials of contract Agreement Legal consideration Parties competent to make contract Free consent Lawful object Insurable interest Contingency Assumption of Risk

PARTIES TO THE CONTRACT INSURER. INSURED. The terms of an ordinary contract of insurance are provided by the insurers and the insured has no choice but either to accept those terms or to refuse to enter into a contract of insurance at all. There is no room for haggling.

Competence of the parties 11. Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.

Minor What will be the situation in case of minor property ? Whether minor can enforce the contract?

Free consent When a 56 year old man got himself insured and died within two years of a heart ailment. He suffered from diabetes and carbuncle and he did not disclose it. The family doctor produced by the insurer could not give any information. The insurer accepted the policy with increased premium.

Legality of object S 23 of the contract act- The consideration or object of an agreement is lawful, unless- it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

Legality of object Unlicensed driver The fruits of crime are irrevocable. Suicide

Subject matter of contract of insurance and subject matter of insurance

Subject matter of insurance Physical object Marine,fire,burglary,fidelity ,livestock insurance: Property Life,personal accident,sickness insurance:Body Liability imposed on the insured against third party in the liability insurance. Actionable Claim;Chose in Action. 1.In the solvency insurance the debt 2. In the patent,license insurance is the monopoly.

Actionable claim As Per Section 3 of the Transfer of Property Act, 1882 Actionable Claim is a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in possession either actual or constructive, of the claimant, which the civil courts recognize as affording grounds of relief whether such debt or beneficial interest be existent, accruing or conditional or contingent”. A borrows Rs. 5000/- from B at 12% per annum interest on 1st April, 2016 and promises to pay back the amount with interest on 1st July,2016. Till 1st July, 2016, the debt is an accruing debt and is an actionableclaim.

Nature of Contract of Insurance Contingent contract. S-31 of Contract Act -1872,A contingent Contract is a Contract to do or not to do something ,if some event collateral to such contract does or does not happen. Insurance is a contract upon speculation-is it true?

example A contracts to pay B taka 300000 as indemnity if B`s house is burnt, provided that B pays Taka 2000 to A. A agrees with B that if it rains today A will pay B taka 100 and if it does not rain B will pay taka 100.

Insurance neither speculative nor wagering agreement Elements of difference Object-protect the insured against losses,gamble for money only Insurable interest Principle of indemnity Logical calculation of premium and risk Wining and losing Liability Public policy

assignment The policy itself. The subject-matter of the insurance. The proceeds of the policy.

Discharge of contract By performance By agreement By insolvency By breach By merger