M05 - Insurance Law

Types of Public Law?

Constitutional - main institutions of government and how they work together + treaties w/ foreign states + Government workers (the Monarch, MPs, Gov Ministers, Judiciary, Civil Services and Armed forces)

Admin law - relationship between private citizen and local / central government

Criminal law - criminal offenses

What is the function of criminal law

Punishment based:

Establish behavioural benchmarks

Forbid actions that cause harm to people / communities

Penalise offenders

Deterrence

Ways Criminal Offences can be tried

Summary - Magistrates Court - minor crimes

Either Way - Magistrates or Crown

Indictable only - Crown court with a jury - most serious offences (murder, robbery, rape etc)

Overview of Criminal Justice Process

Investigation

Arrest and Charge - formally charge or drop charges

First Court Appearance - defendant hears charge, trial date set, decide where it will be tried

Trial - Prosecution must prove defendant’s guilt -

Verdict - announced publicly in court

Sentencing - judge decides punishmen

Burden and Standard of Proof in Criminal Court

Burden - on the state / prosecution as they have resources the defendant may not.

Standard - Beyond reasonable double - due to the severe consequences from conviction

Claimant vs Prosecution vs Defendant

Claimant - brings forth an accusation in Civil law

Prosecution - brings forth an accusation in Criminal law

Defendant - the accused, have to defend their status of innocent

What is jurisdiction

the legal authority of a specific court to rule on disputes

Main Characteristics of English Law

Age - Cases / Laws go back 500+ years and remain in force

Little Codification - mostly case law

Judge-made Precedents become a binding part of law

No written constitution

Adversarial system - court listens and makes judgement (but does not investigate)

What is the North Ireland Protocol

North Ireland must remain aligned with EU customs and rules (Art 5-10)

But they have the option to discontinue this, if they wish

The UK must apply the provision of the EU law under the protoco

Who makes up the Parliament

House of Commons

House of Lords

the Monarch

What are green and white papers

Green - invites response to proposed law changes

White - advanced notice for more definite proposals

Process for the enactment of Public Bills

House of Commons

1st Reading - Formality - read the title to inform of its existence

2nd Reading - Merits of the Bill debated and voted on

Committee Stage - Standing committee discuss details and propose/vote on amendments

Report - Amended bill reported to the House, can be sent back for further work

3rd Reading - Final opportunity for debate (typically only minor changes at this point if any)

House of Lords - similar procedure, but cannot be rejected only delayed

Once passed → Royal Assent as a formality = Statute

What is a consolidating Act

Repeals all previous legislation and re-enact it in one logically arranged statute

What is a Codifying Act

Consolidation of all previous legislation and case law on a subject into a single code

Interpretation - Statutory Aids

Interpretation Act 1978 - singular = plural, man = woman, etc

Acts typically include an interpretation section

Acts have a preamble that outlines scope and purpose

Interpretation - Common Law Rules

Literal Rule - ordinary definition - takes precedence over all others

Technical or Legal meaning

-Noscitur a sociis - word determined by its context (sentence/paragraph)

-Ejusdem generis - word determined by the words that precede it (list)
Golden rule - interpretation that doesnt result in an absurd result

Mischief rule - choose meaning that supports the intention of the Act

Presumptions - no liability without criminal intention or fault, not retrospective, doesnt reduce jurisdiction of the courts, only applies to the UK, doesnt bind the Government, doesnt infringe on rights

Organisation / Structure of Civil Courts

County Courts - 1 Circuit Judge

High Court (1 of 3) - 1 Judge

- Chancery - Business / Money matters (companies, partnerships, trusts, mortgage, revenue)

- Family - Children matters, Family law and family property disputes

- Queens Bench Division (QBD) - Commercial Court, Admiralty Court, Tech/Construction Court

Court of Appeals

Supreme Court

Appeals in Civil Courts

County/Mag → Divisional Court of each High Court (2+ Judges)

County/High → Court of Appeal (Civil) (3+ Judges, or Full Court of 5/7 Judges)

Court of Appeals → Supreme Court (5-12 Justices)

High → Supreme (Leapfrog Appeal)

Organisation / Structure of Criminal Courts

Magistrates Court - 3 Justices or 1 District Judge

Major - Transfer for Trial Proceedings → Crown Court - 1 Judge and Jury

Appeals in Criminal Courts

Magistrates → High Court OR Crown Court

Crown Court → Court of Appeal (Criminal) (3+ Judges, or Full Court of 5/7 Judges)

Court of Appeals → Supreme Court (5-12 Justices)

What is the ratio decidendi

The reason for deciding - material facts of the case, decision of the judge + reason

AKA What is the basis that the precedent was set

What is obiter dicta

Things said by the way - hypotheticals said by the judge that dont form the ratio decidendi, but do provide influence to future cases

Civil Court Precedent Hierarchy

Supreme Court → Court of Appeal → High Court → County Courts

Supreme Court - can depart from its precedents, but do so sparingly

Court of Appeal - bound by its own precedents and Supreme Court

High Court - not bound by its own precedents, only strong influence, but bound by Supreme and Court of Appeal

County Courts - cannot set precedents, but bound by all higher precedents

Criminal Court Precedent Hierarchy

Supreme Court → Court of Appeal → Crown Court → Mag Court

Supreme Court - can depart from its precedents, but do so sparingly

Court of Appeal - bound by its own precedents, but Full Court (5+ Judges) can overrule, bound by Supreme Court

Crown Court - cannot set precedents, but bound by all higher precedents

Magistrates Court - cannot set precedents, but bound by all higher precedents

Reversing a Case vs Overruling a Case

Reverse - Higher court reverses a ruling from a lower court

Overrule - Lower Court rules based on an existing precedent, but Higher court changes this ruling based on a different principle, this overrules the existing precedent in this case and similar cases going forward = new ratio decidendi

Disapproving vs Distinguishing

Disapproving - Court believes that an earlier case was wrongly decided, but the ratio decidendi of the current case is not the same = opinion obiter dictum (not relevant) - disapproves case, weakening it, but not overruling it

Distinguish - decline to follow an earlier precedent due to distinguishing facts between the current/previous case

Law Reporting

Incorporated Council of Law Reporting - publishes semi-official Law reports annually for cases in the High Court + their Appeals

Supreme Court Decisions are published in a separate volume of Appeal cases

Civil Procedure Rules (CPR)

Requires pre-court actions to be completed, intended to facilitate negotiation and ideally avoid court

Issuance - Claimant completes ‘Particulars of Claim’

Defence - Admit the claim and pay our / Object

Allocation - allocated to Small Claims (<10k (5k for personal injury)), Fast Track (straightforward), or Multi Track (>25k or complex

Small Claims vs Fast Track vs Multi Track

 Small - Court issues standard directions, No expert evidence allowed, District judge hears case and takes an active role in asking questions etc

Fast Track - Case heard w/in 30 weeks and concluded w/in 1 day, only 1 expert witness allowed

Multi Track - Judge gives directions and oversees case from beginning to end

What is CPR Part 36

If settlement is offered to the claimant and they do not accept, and the trial outcome is less than this amount, they may have to pay extra costs to the defendant (legal fees etc)

Solicitor vs Barrister

Solicitor - qualified legal professional

- Role - negotiate, gather evidence, oversee case + represent clients / apport barristers (for higher courts)

Barrister - hired by solicitors to represent a case in court

- Role - structure argument into persuasive legal arguments + Typically specialise in 1 area and advise clients on the law / strength of their case (opinion)

What is a legal natural person

Minor - have special exemptions under law as they are inexperienced

- Criminal - <10 incapable of committing a crime ; 10-18 full criminal responsibility

Person lacking mental capacity - must have capacity to understand implications of actions for contracts, but not torts

- Criminal - must have mens rea (guilty intent) to be convicted

Bankrupts - Assets and contracts under control of the trustee, and all liabilities joined with the creditors

Company vs Corporation

Both - artificial legal person / juristic person

Company - juristic person with an independent existence from shareholders

Corporation - group of people with combined resources for a common purpose

Characteristics and Types of Corporations

Corporation sole - legal person representing an official position, but occupied by different people (ex the Monarch)

Corporation Agg - Separate legal entity formed by several individuals whose existence is separate from the persons comprising it (ex Chartered CA, Statutory CA, Registered CA)

Types of Company

Ltd - shares not available to the general public or traded on a public stock exchange

PLC - Public Ltd Company - shares freely sold/traded to the public

LLP - Ltd Liability Partnership - combination of partnership and Ltd

CIC - Community Interest Company - limited company for community benefit

Guarantee - members guarantee certain amounts towards company debts if necessary (non profits)

Unlimited - liability of members is jointly/severally liable (not limited)

Royal Chartered - established by Monarch and historically significant

Overseas - outside of the UK, but established branch in the UK

Unincorporated Associations - groups defined by mutual rights/duties of members (unions)

What is a tort

legal liability for a civil wrong or breach of duty which causes a claimant to suffer loss or harm

Criteria for the tort of Trespass

Must directly cause harm/injury, must be intentional, must be actionable per se (claimant doesn’t have to prove loss/damage)

What falls under the tort of Trespass

Assault - threat of an attack / causes fear of an attack

Battery - hostile application of force, no matter how slight

False imprisonment - total bodily restraint / prevention of them going where they want to 

Trespass to goods - intentional intereference with others’ goods 

• Conversion - taking goods with the intent to keep, modify, destroy, or sell

Trespass to land - unlawful entry, remaining, or leaving objects on others’ land

What is the tort of negligence

failure to take care, where the law requires care to be taken OR a breach of a duty of care

CASE: Donoghue v Stevenson 1932

Relates to Tort of Negligence

Reasonable Foreseeability - duty of care is owed to another person if it is reasonably foreseeable that they will be affected by ones acts/omissions

CASE: Overseas Tankship v Morts Dock and Engineering 1961 (Wagon Mound)

Relates to Tort of Negligence

Remoteness - damage is classed as too remote if it is not foreseeable

CASE: Smith v Leech Brain and Co 1961

Relates to Tort of Negligence

Eggshell Skull Rule - take your victim as you find him

Liability even if due to a pre-existing condition

What is a novus actus interveniens

New intervening cause - breaks the chain of liability

CASE: Hedley Byrne v Heller and Partners 1963

Related to Tort of Negligence - Hedley Byrne Principle

Negligent Misstatement - Liability can still arise from this if the claimant relied on advice given, even outside of an explicit contractual agreement

CASE: Spartan Steel and Alloys v Martin and Co 1973

There is no tort liability for financial loss not related to physical damage (ie BI)

Negligence - Psychiatric Illness

Primary - Caused by the direct action of the defendant - can always sue

Secondary - fear of safety of others/witness action - can sue if sufficiently related victim, saw it in person + sufficiently close in space/time to incident

What falls under the tort of Nuisance

Public nuisance - cause inconvenience / annoyance to public OR interfere with a common right

Private nuisance - interference with a person’s use of their land

Remedy - damages or an injunction

CASE: Rylands v Fletcher

Relates to Tort of Nuisance

Strict liability for those who keep something exceptionally dangerous - if that thing escapes from their land onto another’s and causes damage, its their fault even without negligence

What are the Requirements to prove Breach of a Statutory Duty in Tort

Claimant must prove:

Statute imposes a duty of defendant to claimant and was intended to allow a civil remedy 

Damage must be caused by the breach of this

What are the requirements for Employers in Tort

Take reasonable care to:

Select competent staff

Provide and maintain proper plant, premises and equipment

Provide a safe system of work

How is vicarious liability determined?

Is the relationship employment / akin to employment?

Is the tort sufficiently closely connected with that ‘employment’?

What is the liability for Producers of Goods in tort

Strict liability for any personal injury / damage to private property caused by a defect in goods

Producer = Manufacturer, Abstractor, or Processor of Goods OR those who put their branding on a product

Defective Product - safety of the product is not what a person would generally expect

What is the tort of Defamation

Defamatory statement - false and exposes claimant to hatred, ridicule, or contempt OR lowers them in the eyes of the general public

- Must harm actual reputation, not just hurt dignity

What falls under the Tort of Defamation

Slander - non permanent form (speech, gestures)
Libel - permanent form (email, text, social media, publication etc)

Damage - must be a material financial loss (loss of job, loss of opportunity / income etc)

EXCEPTION - allegations of imprisonable crimes OR that they are unfit to carry out profession

Defences for Defamation

Truth – statement was factual

Honest opinion – statement is a matter of comment/opinion – must prove it was honest, relevant and made without malice

Publication on a matter of public interest – must prove the publisher reasonably believed the publication was in the public interest, whether true or false

Innocent defamation – published unintentionally – requires a publication of a correction and an apology, along with paying damages

Privilege – applies to judicial and parliamentary proceedings for statements made to the police by members of the public

General Defences in Tort

Self Defence – law allows use of reasonable force to defend yourself, property and other people (family, employees etc) or to prevent crime (for intentional torts like battery or false imprisonment)

Necessity – act was carried out in order to avoid a greater evil (for intentional torts like trespass)

Statutory authority – act is permitted by statute law (Cannot be use in cases of negligence, because the intent would never align)

Consent – claimant agrees to a deliberate act by the defendant (boxing, haircut)

Volenti non fit injuria – claimant consented to the risk of negligence by defendant (Does not apply to rescue cases, or beach of statutory duty, and hardly in employment injury - not favoured by courts)

Contributory negligence – claimant is partly to blame or their actions exacerbated injuries suffered (ex car accident where claimant didn’t wear a seatbelt)

- Not a complete defence, merely reduces damages awarded

What is contribution

The right to recover contribution from any parties jointly or similarly liable for damages

What are the Statutes of Limitation for Torts

Defamation - 1y

Personal Injury - 3y

Most other torts - 6y

Time starts on date of the cause of action

Latent Bodily Injury / Latent Property Damage - time starts on date of knowledge

Remedies in Tort

Damages:

Special Damages - claimant sets price and prove strictly at trial (loss of earnings, med expenses etc)

General - law automatically presumes these (pain and suffering)

Aggravated - additional money to reflect motive/conduct

Exemplary / Punitive - additional money to punish the wrongdoer for their conduct (common in US)
Nominal - no real loss so a token sum marks the fact the defendant is in the wrong

Contemptuous damage - tiny sum to mark the courts disapproval of the claim / claimants conduct

Injunction:

Mandatory - command to do something 

Prohibitory - command to refrain from doing something

What are the different types of Contracts?

Contracts under seal - formal contract that is signed and has the wax seal of the signer attached, and is witnessed

Unilateral Contracts - one-sided agreement to pay for a specific act (reward on a flyer)

Bilateral - agreement between 2+ parties

Void Contract - unenforceable - lack of capacity / illegality

Voidable - agreement that can be voided on certain grounds

Requirements to Form a Contract

Agreement - offer and acceptance

Intention to create legal relations

Consideration - give and take

Agreement in the form required by law (if applicable)

Capacity to Contract

What are the requirements for Agreement of a Contract?

Offer - intention for it to be immediately bound if accepted

Invitation to treat - statement made during negotiation, not an offer

Acceptance - must be a positive act and communicated to offeror/agent

- EXCEPTION: Where the terms of the offer indicate that acceptance begins with the carrying out of the offerees part of the agreement

What are the requirements for Consideration of a Contract?

Must have a real benefit / detriment, but need not be equivalent in value

Must move from the promisor - 3rd party cannot provide the consideration

EXEPTION - Promissory estoppel - A can hold B accountable for damage / loss of A relied on the promise of B (even without consideration) and B then took that promise back (only used as a defence)

What is promissory estoppel

A can hold B accountable for damage / loss of A relied on the promise of B (even without consideration) and B then took that promise back (only used as a defence)

What type of  form requirements can contracts have under law?

Deeds (contracts under seal) - must be signed and witnessed

Contracts in writing 

Contracts evidenced in writing

Contracts where one party must supply written particulars (ex employer, landlord etc)

Types of terms of a Contract

Express

Implied - implied in fact (obvious), Implied by custom, implied in law

What Rules did the UCTA 1977 introduce?

Unfair Contract Terms Act - Since 2015 for non consumer only

Claimant must prove unreasonableness - was it fair with the knowledge and bargaining power and options at hand?

Negligence liability for bodily injury cannot be excluded

Breach of Contract liability cannot be excluded or restricted

Quality of Goods etc cannot be excluded/restricted for Sale of Goods

What Rules did the Consumer Rights Act 2015 introduce?

Claimant must prove unfairness - causes significant imbalance in parties’ rights and obligations to the detriment of the consumer

Unfair terms are not binding on the consumer, even if the term was individually negotiated by the parties

Implied terms are not binding on the consumer

Negligence liability for bodily injury cannot be excluded/restricted (does not apply to insurance)

Warranty vs Condition (general contract law)

Warranty – term which only affects a minor aspect of the agreement

- Breach – right to claim damages, but not to terminate the contract

Condition – term which related to an important aspect of the agreement

- Breach – right to claim damages and terminate the contract

NOTE: Warranty means something different in insurance

What is a defective contract?

Destroys the validity of the contract or makes it partly ineffective

May result from: illegality, improper pressure, mistake, misrepresentation, non-disclosure

- Contrary to Public Policy - brings about results harmful to the public

- Restraint of Trade - prima facie void (generally void), but may be upheld if reasonable

ex non compete clauses, sale of business, then retaining customers in new similar business

- Contrary to Law - illegal

What is a Mistake, and when will this cause a contract to be void?

Same Mistake - both believe item exists, but its destroyed

Different Mistake - each believes the transaction is about a different item

- Mistake of the subject matter - void

- Mistake of the Quality of the Subject matter - not void unless the mistake is essentially different

- Mistake of the Identity - A defrauds B by pretending to be C to sell goods - may be void

What is a Misrepresentation, and what are the Remedies available

False statement of fact which induces a party to enter an agreement

Fraudulent - knows its false, doesn’t believe its true, or doesn’t care if its true or false

Innocent - false, but the maker honestly believes its true

Negligent - false, because the person did not take sufficient care to check that it was correct (ex professionals who give bad advice and causes a loss to the victim who relied upon their statement)

Remedies - Avoidance or damages (for innocent misrep)

When are the duties under a contract dischargd?

Performance - each party has carried out their side of the agreement

Breach - right to claim damages, sometimes right to termination

Frustration - performance becomes illegal, impossible or futile

Discharge by Agreement

Discharge by Operation of Law - merger, death or bankruptcy

Remedies in Contract 

Termination - for sufficiently serious breaches

Damages - main remedy for contract breaches; always have the right to claim

Equitable remedies (injunction) - awarded at the discretion of the court

Restitution - return of the property/mone

What are the Statutes of Limitation for Contracts

Simple Contract - 6y

Personal Injury Claims - 3y

Deed - 12y

Period begins on the date of the cause of action

EXCEPTION: Clauses can alter the statute by express term

What rule did Contracts (Rights of Third Parties) Act 1999 introduce?

A 3rd party can enforce a contract if:

The contract provides they may do so (expressly by name/group)

The contract is for the benefit of the 3^rd party (unless it appears the parties did not intend the term to be enforceable by them)

What is Assignment in Contract Law?

transfer of rights under a contract from one person to another

Transfer of ‘Chose in Action’ (intangible contractual right) 

Transfer of ‘Chose in Possession’ (tangible contractual right)

Statutory Assignment - must be absolute (whole thing and not conditional) and in writing

Equitable assignment - must inform the assignee of the transfer

What is a Novation

A debt is cancelled by agreement and replaced

All 3 parties must agree: Party A, Assignee and Party B

Assignment of Insurance Contracts

Assignment of Subject Matter – not automatic and uncommon, but possible (x. Selling a house or car with insurance)

Assignment of Contract Benefit - statutory or equitably (ex recovery of claim money, assign payment of claim to builder directly)

Assignment of Contract - must have the consent of insurer and occur at the time the property is transferred

EXCEPTIONS: Marine - assigned each change of ownership; Life - can be freely assigned

How can an agent be established?

Agreement / Through Contract

Ratification - retrospectively

Necessity - emergency

What are the duties of an agent?

Obedience

Care and skill

Personal performance - no sub-delegation of duties

Good faith - full disclosure

Accounting for money received

What is imputed knowledge

the law assumes that any information known by agent is known by principal

What are the rights of an agent?

Remuneration - typically via commission

Indemnity

Lien - retain goods as a means of security for a debt

What are the types of authority of an agent?

Actual - express or implied authority

Apparent - no real authority, but it appears so to a 3rd party

Disclosed vs Undisclosed Principal during contract formation

Disclosed - aware of the fact that there is a principal (though not necessarily their identity)

Undisclosed - unaware they are dealing with an agent - this can still be enforced by the principal

- Unless they didn’t have capacity or 3rd party only entered bc they thought it was the agent

- in this case 3rd party can enforce against agent or principal, but not both

Payments made through an agent

Payment by Principal - debt only considered paid once it reaches the 3rd party

Payment by 3rd Party - debt considered paid once it reaches the agent (if they have authority to receive payments on principals behalf)

Ways Agency Agreements can be Terminated

Agreement

Performance of duties to completion

Lapse of time

Withdrawal - principal revokes agents authority

Death of either party

Bankruptcy

Insanity

Frustration

What are the formal requirements of a Marine Contract of Insurance

Must be in writing, specifying the subject matter and name of insured (or agent) signed by the insurer (or agent) - in order to make a claim

What classifies as insurable interest?

the insured would suffer a loss if this subject matter is damaged or lost

- Cannot be based on expectancy of receiving goods, must currently have them

What did the MIA 1906 change about insurable interest?

Policies void without an insurable interest at the time of loss (for Marine policies)

What are the requirements for insurable interest in Life Insurance?

Family - own life and spouse = unlimited

Business relationship - Partners, key employees, debtor = limited interest

Property

Owners, both Mortgagees and Mortgagors, Executors and trustees, Bailee, Landlord and Tenant, People living together - limited interest typically

What does liability insurance protect against and what can you claim for?

Peril - risk of liability due to negligence/error/omission to pay compensation to a 3rd party who suffered a loss or damage

Claim - cost of compensation for justified claims OR cost of defending against unjustified claims, the handling of the claim, and the court costs

Pre-contractual information duty under the Insurance Act 2015

Non Consumers

Duty to make a fair representation - duty to NOT misrepresent AND disclose all material facts

- Must give insurer sufficient information such that a prudent insurer would ask additional questions if necessary

What is the Actual Inducement Test

Test of Materiality - for both Consumer and Non Consume

Statutory for remedy for Breach of Fair Presentation - must prove that the UW was induced based on the material non-disclosure / misrepresentation 

- Does not have to relate to the loss to stand

Remedy available if: Insurer would not have entered, or would have entered on different terms

Remedies for Breach of Duty of Fair Presentation

Inducement Test first

IF Deliberate or Reckless - avoid contract from incept + retain premiums

IF NOT deliberate or Reckless:

- If would not have entered: avoid contract, return premium

-  If would have entered on different terms: act as if it had entered on those terms

- If would have entered for more premium: proportionally reduce that amount of premium from the claim

Calculation for Proportional Reduction of Payment of a Claim based on Premium Charged / Sums Insured

Remedies for Breach of Reasonable Care to not make a Misrepresentation

Inducement Test first

IF Deliberate or Reckless - avoid contract from incept + retain premiums

IF Careless (honest mistake):

- If would not have entered: avoid contract, return premium

-  If would have entered on different terms: act as if it had entered on those terms

- If would have entered for more premium: proportionally reduce that amount of premium from the claim

What are the requirements of PRIN 12

Act to deliver good outcomes for retail customers

- Act in good faith

- Avoid causing foreseeable harm

-  Enable and support customers to pursue their financial objectives

What are the Remedies for Fraud in the claims process

Burden of proof lies with the insurer

Type: Falsification, Deliberate, Exaggeration

Remedy (Consumer and Non Consumer) - forfeiture of the claim + recovery of any funds paid + termination of the contract from time of fraud + insurer may be able to claim damages

Type: Collateral - lie about circumstances of a genuine loss - Insurer NOT entitled to reject the claim under Versloot 2016