Fire Insurance contract is an insurance policy where insurer agrees to make good the loss of the insured that occurs out of a fire accident that it was during a period that was specified. The contract of fire insurance contains the maximum sum that can be claimed by the insured. It is important to note that in this contract of insurance, only the loss is paid by the insurer to the insured but not the maximum amount specified in the contract made in between the insurer and the insured. The maximum assured sum is paid only when the loss is more than the specified amount according to the contract. The fire insurance policies are of different types and they were specified here under. Types of Fire Insurance Policies Specific Fire Insurance Policy: In this type of fire insurance policy, the loss is covered up to a specific amount. That specific Continue reading
Mercantile Law
Rule of Caveat Emptor
Rule of Caveat Emptor Caveat emptor is a Latin term meaning “let the buyer beware”. It is a general rule of law that a purchaser assumes the risk of his/her purchase. The intent of the rule is to place a duty of care on the buyer in selecting an item and putting forth appropriate inquiry before completing the sale. In this way, a seller is also protected from liability for buyer’s remorse. A seller is under no duty to reveal unflattered truths about the goods sold and therefore, whenever the buyer buys goods, he must exercise necessary care in his own interest. A buyer, in contract of sale of specific goods, purchases the goods at his own risk as regard as the quality, price of the goods except on the case of fraud or when any condition to that effect is laid down in the contract. A buyer cannot hold Continue reading
Legal Definition of a Contract
Definition of Contract According to section 2(h) of the Indian Contract Act: “An agreement enforceable by law is a contract.” A contract therefore, is an agreement the object of which is to create a legal obligation i.e., a duty enforceable by law. From the above definition, we find that a contract essentially consists of two elements: (1) An agreement and (2) Legal obligation i.e., a duty enforceable by law. We shall now examine these elements detail. 1. Agreement. As per section 2 (e): “Every promise and every set of promises, forming the consideration for each other, is an agreement.” Thus it is clear from this definition that a ‘promise’ is an agreement. What is a ‘promise’? The answer to this question is contained in section 2 (b) which defines the term.” When the person to whom the proposal is made signifies his assent thereto the proposal is said to be Continue reading
Motions and Resolutions
A ‘motion’ is a definite proposal put before a meeting for its consideration and adoption. A ‘resolution’ on the other hand is the formal expression of the decision of a meeting. When a motion has been duly voted upon and passed by a majority, with or without amendment, it is called a ‘resolution’. A resolution once adopted and recorded in the minutes becomes the official decision of the meeting and cannot be rescinded or revoked except by the consent of two-thirds majority in a meeting specially called for the purpose. Kinds of Resolutions 1. Ordinary Resolution A resolution which is passed by a simple majority of votes cast by members present in person or by proxy is called ‘ordinary resolution’. Simple majority means that the votes cast in favor of the resolution must be at least one more than 50 per cent of the votes cast. An ordinary resolution must Continue reading
What is a Bill of Exchange? Definition and Features
According to section 5 of the Negotiable Instruments Act, 1881, defines Bill Of Exchange as “A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.” A promise or order to pay is not “conditional”, within the meaning of this section and section 4, by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be “certain”, within the meaning of this section and section and section 4, although it includes Continue reading
Application of General Rules of Law of Contracts to Life Insurance
A contract of insurance is a contract of utmost good faith technically known as uberrimae fide. The doctrine of disclosing all material facts is embodied in this important principles, which applies to all forms of insurance. The Proposer, who is one of the parties to the contract, is presumed to have means of knowledge, which are not accessible to the insurer, who is the other party to the contract. Therefore, the proposer is bound to tell the insurer, everything affecting the judgement of the insurer. In all contract of insurance, the proposer is bound to make full disclosure of all material facts and not merely those which he thinks material. Misrepresentation, non-disclosure or fraud in any document leading to acceptance of the risk automatically discharges the insurer from all liabilities under the contract. Application of General Rules of Law of Contracts to Life Insurance A contract of life insurance is Continue reading