The insurance Policy,Chapter Outline,Fundamentals of Contract Law Type of Contract General Requirement for a Contract The Policy as Property Right To Use and Enjoy Property Right to Dispose of Property,Fundamentals of Contract Law,A contract is a legally enforceable agreement between two or more parties. The two parties to an individual life an health insurance contract are insurance companies that issued the policy and the individual who purchased the policy.,Type of Contract,Formal contracts and informal contracts Bilateral contracts and unilateral contracts Commutative contracts and aleatory contracts Bargaining contracts and contracts of adhesion,Formal and informal Contracts,A formal contract is one that is enforceable because the parties to the contract met certain formalities concerning the form of the agreement. An informal contract is a contract that is enforceable because the parties to the contract met requirements concerning the substance of the agreement rather than requirement concerning the form of the agreement,Formal and informal Contracts,In theory, life and health insurance contracts, as informal contracts,could be made in either written or oral form. But in some countries, insurance contracts are required to express in written form.,Formal and informal Contracts,第十三条 投保人提出保险要求，经保险人同意承保，并就合同的条款达成协议，保险合同成立。保险人应当及时向投保人签发保险单或者其他保险凭证，并在保险单或者其他保险凭证中载明当事人双方约定的合同内容。 经投保人和保险人协商同意，也可以采取前款规定以外的其他书面协议形式订立保险合同。,Formal and informal Contracts,Can a person enter into a valid life insurance contract on the Internet?,Bilateral and Unilateral Contracts,Bilateral contract a contract between two parties who both make legally enforceable promises when they enter into the contract. Unilateral contract a contract between two parties only one of them makes legally enforceable promises when entering into the contract.,Bilateral and Unilateral Contracts,Life and health insurance policies are unilateral contracts. The insurance promise to provide coverage in return for a stated premium. The purchase of the policy does not promise to pay the premiums and cannot be compelled by law to pay the premiums.,Commutative and Aleatory Contracts,Commutative contract an agreement under which the parties specify in advance the values that will be exchange , moreover, the parties generally exchange items or services that they are of relatively equal value. Aleatory contract an agreement under which one party provides something of value to another party in exchange for a conditional promise.,Commutative and Aleatory Contracts,A conditional promise is a promise to perform a stated act if a specified,uncertain event occurs. Life and health insurance policies are aleatory contracts.,Bargaining Contracts and Contract of Adhesion,Bargaining contract a contract that is creates by both contracting parties who, as equals, set the terms and conditions of the contract. Contract of adhesion a contract that one contracting party prepares and that the other contracting party must accept or reject as a whole, without any bargaining between the parties.,Bargaining Contracts and Contract of Adhesion,Individual life and health insurance policies are contracts of adhesion. If any policy provision is ambiguous,the courts usually interpret that provision in whatever manner would be most favorable to the policyowner or the beneficiary.,General Requirement for a Contract,Valid contract a contract that is enforceable at law. Void contract a contract that was never enforceable at law. Voidable contract a contract in which a party has the right to avoid her obligations under the contract without incurring legal liability.,Four requirement of a valid informal contract,The parties to the contract must be manifest their mutual assent to the term of the contracts. The parties to the contract must have contractual capacity. The parties to the contract must exchange legally adequate consideration. The contract must be for a lawful purpose.,Mutual Assent,Mutual assent is met when the parties reach a meeting of minds about the terms of their agreement.,Contractual Capacity,Contractual capacity each party must have the legal capacity to make a contract. Contractual capacity of individuals Contractual capacity of organizations,Contractual capacity of individuals,The majority of people who have limited contractual capacity are: minors lack mental capacity,Minors,Generally, contracts entered into by a minor are voildable by the minor. The insurance company have to return the premium the minor had paid on the policy.,Lack mental capacity,A persons lack of mental capacity may affect his contractual capacity in two situations. A court declares the person to be insane or mentally incompetent. The persons mental competent is impaired as a result of being drunk, drugged, or insane.,Lack mental capacity,A contract entered into by a person who has been declared insane or incompetent is usually void. Contract entered into by someone whose mental competence is impaired are generally voidable.,