1 Offer& Acceptance

7/31/2019 1 Offer& Acceptance

1/81

Content 3

1


2/81

Law of contract

2


3/81

Law of Contracts

3


4/81

Law of Contracts

A has invited his friend B to have lunchwith him in his (A) house. B accepted

the offer . But he(B) could not attend thelunch at that time. Such a breachcommitted by B is not actionable becausethere was no intention to create legal

obligation. Rather it was only a socialagreement

4


5/81

Law of Contracts

,

,

5


6/81

Simple Contracts,

Simple Contract means :

Simple by nature (Not very formal)

These are not required to be signed, sealedand delivered

May be in writing or words of mouth (orally)

6


7/81

Simple Contracts (Contd)

Essential

Elements

Unrevoked offer

Unqualified acceptance

consideration

Consensus ad idem

Capacity of the party

Legality of the object

7


8/81


1. Unrevoked offer:

there must be an unrevoked offer from the offerer, which offer is left tobe accepted by the offeree. The offerer has the right to withdraw hisoffer before it is accepted. Sometimes a time limit is attached with theoffer within which the acceptance must be made.

2. Unqualified Acceptance:

There must be an acceptance of offer is made and that acceptancemust be unqualified. A qualified acceptance is noacceptance and it isactually a counteroffer made by the other party.

Illustration of unqualified acceptance

A offers his car for sale for tk.500,000 to B. If B accepts that price and

doesnt make any change in that offer, then this is an unqualifiedacceptance. On the other hand, if B makes a counter offer to buy the carfor tk450,000 ,then there is no unqualified acceptance of the original offer.

8


9/81


3. Consideration:

consideration may be defined as some right, benefit, profit oradvantage accruing to one party or some loss, detriment orresponsibility suffered or undertaken by other.

Illustration of considerationIn insurance contract, the insured (one party) pays the premium as

consideration of the contract that passes to the insurer (other party).And in consideration, the insurer promises to pay claim that passes tothe insured.

4. Consensus ad idem:

the parties to the contract must be of the same mind as to the proposedcontract. They must agree to same thing in the same sense.

9


10/81


5. Capacity of the party:

the parties must have the legal capacity to enter into a contract. Minorsdo not have any capacity to enter into contracts, unless the contractrelates to necessaries for life. Persons of unsound mind and personswho have been disqualified by law also do not have any capacity toenter into contracts.

6. Legality of the object:the subject matter of the contract must be legal. Otherwise the contractmay be void or illegal. Normally a contract will be valid provided

it is not barred by law

Does not injure the person or property of another

Does not impair the provision of any law

Does not go against the public policy

10


11/81

Specialty Contract

The specialty contract is a contract which must be,

Example: Gratuitous promises, transfer of land etc.

11


12/81

Difference between simple contracts and specialty

contracts

Subject of difference simple

contracts

specialty

contracts

Doctrine of estoppels

(evidence to support

the statement)

Not applied Applied

Consideration Must be

present

Need not to be

present

Stamp duty Not required Required

documentation Not needed Must be needed

12


13/81

CONTRACT OF RECORD

It refers torecords kept

in courtsarising out

ofjudgments

It is not

contract inlegal sense.Contract of Record

13


14/81

Contract of Insurance

A

There are two parties: Insurer andInsured

B Have a consideration called

premium

C Insurer promises to indemnify the

insured against financial losses

A contract is called a contract of

insurance

14


15/81

SUBJECT MATTER OF INSURANCE

Subject matter of Insurance.Property, life , limb or liability

On the other hand,

Subject matter of Insurance contract.

The legal financial interest of a personin that Property, life , limb or liability

(subject matter of insurance)

15


16/81

Difference between insurance and wagering:

subject Insurance wagering

Types Valid contract Void contract

Utmost good faith Required Not required

Repetition of

Insured Events

May or may not take

place, May take placemore than once

(except life)

Definitely take place

only once

Insurable interest Required Not required

Indemnity Applied Not applied, the

person winning gets

back his stake

Immunity from loss Known as to which

party is immune

Not known which

party is going to win 16


17/81

Encompassing the transfer of rights held by one party the

assignor- to another party assignee

Assignment

In short..

In broad sense..

A situation whereby an original party to the contract is changedand replaced by another so that another shall now becomeentitled to all benefits and in the same way be subjected to allobligations as per original contract.

17


18/81

There are two point of view regarding the subject of assignmentin insurance

Assignment(Contd)

Assignment of policyproceeds only

Assignment of policy

18


19/81

Assignment of policy proceeds

Features

Unalteredinsured,insured

remain thesame

Policyproceeds is

assigned tothird party

Fulfilment ofterms &

obligationsremains to the

insured He still remainsas insured anda party to the

contract

Notassignment in

true sense

Assignment(Contd)

19


20/81

Assignment of policy

Features

Original

insured isreplaced

Transfer of rightsand obligations

under the originalcontract

Different rules areapplied as the parties tothe contract is changed

along with shifting ofrights and obligations

Assignment in

true sense

Complexformat

Assignment(Contd)

20


21/81


22/81

Fire insurance

This type of insurance is not assignable because of being personalinsurance

Personal integrity of the insured of insured influence the decision ofthe insurer

There is no guarantee of accepting the new insured by the insurersfor the continuation of contract

If there is any change in ownership, it must be communicated to theinsurer

Assignment(Contd)

22

A i t(C td)


23/81

Assignment(Contd)

Marine insurance

Marine insurance are freely assignable as per Marine Insurance Act

No personal element is involved in this insurance

Different consideration applies to cargo and hull insurance

Regarding cargo insurance there is no bar in overseas trade

Policy is to be assigned at the time of sale of cargo

Assignment may or may not bear the name of the assignee

Assignment is restricted in HULL policy because of personal matter

So it becomes Novation and not assignment

23


24/81

Assignment(Contd)

Life insurance

Assignment of policy proceeds is possible in life insurance

The life insured remains the same

The assignee could not have any insurable interest on the lifeassured

24


25/81

Classification of insurance.....

Classification ofinsurance

Branch wiseclassification

Subject matterwise

classification

25


26/81

Classification of insurance.....

Branch wiseclassification

Marine

Fire

Life

Accident

26


27/81

Domain of marine insurance

Hull Meaning the insurance of ship

Cargo

Meaning the insurance of goods

being conveyed

freight

Meaning the insurance of the

consideration, subject matter for theconveyance of goods

27


28/81

Domain of fire insurance

loss

28


29/81

Domain of life insurance

Life insuranceOrdinary life

insurance

Industrial life insurance

Annuity

Group life insurance

Personal accidental

accident

29


30/81

Domain of the insurance of accident

Accidentalinsurance

Personalaccident burglary

Motor

Employersliability

Publicliability

Product liability

Cashsafe andtransit

Cropinsurance

Creditinsurance

Etc

30


31/81

This is important to know that accident department isstill an open department and any new type of policywhich will not appropriately come under marine, fire,

and life will be treated under accident department.

An information that has extra focus

31


32/81

Domain of subject matter-wise insurance:

Subject matter wise

Insurance of person

Insurance of property

Insurance of liability

Insurance of liability

32

3


33/81

3

33


34/81

Property insurance

Propertyinsurance

Property insurance mainlycovers property or materials

damage

against unforeseen risk tosecure relevant property

34

Property insurance


35/81

Property insurance

Classification ofproperty

insurance

Fire insurance

Marine insurance

Engineering insurance

Motor insurance

Aviation insurance

Livestock insurance

Crops insurance

35

Property insurance ( contd)


36/81

Property insurance ( cont d)

Types of marine policies

There are usually five types, on the basis of which marine policycan be issued. Those are:

1.Time policy: Duration of the policy cover the time factor isimportant here. The subject matter of insurance is normallycovered for a year whatever might be the number if voyagewithin that year.

2. Voyage policy: The policy covers a particular voyageirrespective of the time factor

3. Mixed policy : to settle the problem caused in time and voyagepolicy a policy has been introduced which is called mixed policy

36


37/81

4. Floating policy: this type of insurance has been introduced to

save the difficulties of merchants in effecting numbers ofpolicies for each time of shipment, a floating policy may beissued for a round sum covering the numbers of anticipatedshipment.

5. These types of policies are issued in respect of ships whilst inthe process of erection or building at dockyard


37

P t i ( td)


38/81

Subject matter of insurance

1. Hull : this refers to the ship, that is to say, hull and machineryof the vessel. The ship owner can insure it against probablelosses as such.

2. Cargo : this refers to goods or merchandise that are being

imported or exported.3. Freight: this is the consideration payable to the ship owner in

respect of carriage of goods by the owners ship.


38

3


39/81

SCOPES OF FIRE

INSURANCE3

39


40/81

Fire insurance issues the policies that

provides protection against financial losses

arising out of the operation of fire or certainother specified perils.

The subject matters of fire insurance areusually:

40


41/81

The scope of fire insurance may be considered under twobroad heading, viz

.

41


42/81

Under this heading various types of policies

are effected & these are:

Standardfire policy

Specialperils

insurance

Declaration policy

Blanketpolicy

Reinstatementpolicy Building

in courseof

erection

Households

policies

Sprinklerleakage

insurance

42


43/81

- Used foralmost alltypes of fireinsurancecovers.

- Standardizedfor providingcertaincommon typescover requiredby all.

43


44/81

whether or not there is any fireinvolved.

of boilers or of gas used fordomestic purpose only eventhough no fire is involved.

whether resulting from explosion or otherwise,

but not happing through:

i) Its own spontaneousfermentation orheating or its

undergoing anyprocess involving the

application of heat.

ii) Earthquake, riot civil

communication, war, invasion,act of foreign enemy, civil war,

rebellion, revolution,insurrection, hostilities, military

power or usurped power.

44


45/81

45


46/81

Policies cover the losses for additionpayment which losses are excluded

by the standard fire policy. These

perils are :

46


47/81

47


48/81

If , # actual premium > provisional premium paid,

then the balance is demanded from the insured

&

If , # actual premium < provisional premium paid,

then the balance is refunded.

48


49/81

these policies are aimed at

simplifying complex fire risk.

49


50/81

50


51/81

51


52/81

52


53/81

53

3


54/81

CONSEQUENTIALLOSS INSURANCE3

54


55/81

CONSEQUENTIAL LOSS INSURANCE

A Policy primarily aims at providing protection against

loss of revenue or loss of earning during this inevitableperiod of interruption of the business caused by materialsloss due to fire.

(Loss Of Profit Insurance)

55

COVER PROVIDED:


56/81

COVER PROVIDED:

1. Loss of earning, which is usually measured by net profit.2. Standing charges, which are still required to be uncured by the

insured even thought the business has been interred.

Examples of such expenditures are,

Taxes,

Electricity,

Rent,

Telephone bills

Auditors fee

Salary,

56

COVER PROVIDED:


57/81

COVER PROVIDED:

3. Extra expenditures incurred by the incurred with the soleobject of minimizing loss of earning or loss of revenue during

the interruption period.

For example,

The insured may hire premises for a temporary period .

The purpose of the expenditures is to reduce the

Ultimate liability under the policy. . . . .

57

3


58/81

3

58

Accident Insurance:


59/81

Accident Insurance:

Any policy that does not appropriately come under marine, fireor life shall come under accident department. The policies,

which fall within the scope of property insurance, will bediscussed here.

Policies

59

Clissification of Bulglary


60/81

Burglary (BusinessPremises) insurance

This policy aims atproviding cover in respectof the property of business

premises.

Burglary (Privatedwelling) insurance

This policy aims at providingcover in respect of loss ofcontents in a private dwelling

house or the building itself.

Clissification of BulglaryInsurance

60

Clissification of Bulglary


61/81

Clissification of BulglaryInsurance

All Risks Policy

This type of policy affords avery wide protection withregard to valuableproperties.

Cash in safe and transit

The policy aims at providingprotection when the moneyis subjected to theft orrobbery.

61


62/81

Privatecars

Commercial

Vehicles

MotorCycles

Agricultural

Vehicles

Types of Motor

Vehicles

policies

62

Contractors All


63/81

Contractors AllRisk

EngineeringInsurance

The policy aims at covering theentire contract work includingconstruction, materials, plants,equipments, machineries etc.

This type of insuranceembraces, steam boilers, lifts,hoists, cranes, electrical plantsengines, refrigeration plants

etc.

63

Glass


64/81

Insurance

The policy providesprotection to the insured inrespect of loss or damageto his crops.

This type of policy provides cover inrespect of accidental damage orbreakage of all types of glasses incommon use.

CropInsurance

64

Aviation Insurance


65/81

Insurance of pilots, crews and

ground staffs for personal accident.Insurance of pilots against loss of

professional licenses.Loss or damage to cargo carried.Loss of use of the aircraft following

an accident

This insurance basicallyrelates to cattle and horsesand provides protectionagainst loss of animalscaused by disease oraccidents.

Aviation Insurance

Live-stockInsurance

65

3


66/81

WAR-RISK

INSURANCE

3

66


67/81

War

Insurrec

-tion

Invasion

Rebellion Hijacking

Massdestructio

n

Hostilities

Militaryor usurpe

67

WAR-RISK INSURANCE


68/81

68


69/81

69

MARINE INSURANCE


70/81

70

FIRE INSURANCE


71/81

FIRE INSURANCE

71

LIABILITY 3


72/81

LIABILITY

INSURANCES..

3

72


73/81

ACCIDENTliability policy

Different accident liability policies are

Employers Liability Insurance Public Liability Insurance

Product Liability Insurance

Professional Indemnity Insurance

Motor Insurance

Aviation Insurance

(Basically coversliability)

(Partly covers liability)


74/81

EMPLOYER,SLIABILITY INSURANCE

Employers liability policies aredesigned to the employer (insured)in respect of the legal liabilities thatmight devolve on him arising out of

accidental death or bodily injury tohis employees in course of work.

Employers Liability Insurance:


75/81

p y y

Occupationaldiseases,

Totally or partiallyincapacitating

Public Liability Insurance:


76/81

y

Wide range of policies is available in the market.

Accidental death or bodily injury to third party (includingillness or disease), not being persons in his employment,due to the negligent act of the insured or for which he isresponsible

Accidental damage caused to the property of the thirdparty due to the negligent act of the insured or for which heis responsible.

Product Liability Insurance:


77/81

y

These types of policies are applicable in following

cases In respect of the legal liabilitiesof the manufacturers andsuppliers

Cosmetic manufacturers,

Electrical appliancemanufacturers

Hospital and machinerymanufacturers

Motor Insurance:


78/81

For the purpose of providing cover in respect of own-damage, covers are also provided in respect of legal

liability of the insured arising out of.

Accidental damage caused to property of third

party.

Death and bodily injury to third party

Aviation Insurance:


79/81

Accidental death and bodily injury to third

parties,Damage caused to the property of third

parties

Death and bodily injury to passengers andtheir properties, and

Loss or damage to cargo.

In a concise view.


80/81

Insurance contract is a contract with allrequired formalities.

Because of human attitude the necessityof insurance contracts is increased

All insurance contract s are

classified in specific group.Every new or unexpected events haschance to be included in insurance groupaccording to their nature.

Insurance contract of specific groupprovides specific facilities to the specificperson


81/81

1 Offer& Acceptance

Documents

Transcript of 1 Offer& Acceptance