The contract of insurance is very useful to indemnify any loss. In this light, contract of insurance is also called as contract of indemnity in which insurer indemnifies the loss incurred due to the happening or non-happening of any event depending upon contingency.
To make contract of insurance valid in the eye of law, some essential elements must be considered in its process of validity. The insurance contract, like any other contracts must satisfy the usual conditions of a contract.
Agreement means communication by the parties to one another of their intentions to create legal relationship. For a valid contract of insurance, there must be an agreement between the parties, i.e. one making offer or proposal and another accepting the proposal or signifying his acceptance upon proposal.
There must be free consent between the parties to contract. Consent means that parties to an agreement must agree on a specific thing in the same sense or their understanding should be the same. Consent must be given by the parties thereto in a contract, freely, independently, without any fear and favor. The consent is known to be free when it is not caused by, fraud, misrepresentation, mistakes and other undue influences .
The parties in an agreement must be legally competent to enter into the contract. It means both parties in the insurance contract must be age of majority, posses sound mind and not disqualified by any ;aw of the country. It clears that a person who is minor, lunatics, idiot and alike cannot enter into a insurance contract. The contract entered into by these will be declared as void.
In insurance contract, the object of the contract must be lawful as in other types of contracts. The agreement must not relate to a thing which is contrary to the provision of any law or has expressly been forbidden by any law. It must not be of such nature that if permitted, it implies injury to the person or property of other or immoral or opposed to public policy.
There must be due and lawful consideration in the insurance contract. The consideration, for which the contract is entered and created by the parties, must be lawful. To establish legal relationship, to create obligation between them and to make it enforceable by law there must be lawful consideration.
To make an agreement valid, prescribed legal formalities of writing, registration, etc. must have been observed. In the contract of insurance, the agreement between parties must be in written form and dully signed by both parties, properly attested by witness and registered otherwise, it may not be enforced by the court.
To make contract of insurance valid in the eye of law, some essential elements must be considered in its process of validity. The insurance contract, like any other contracts must satisfy the usual conditions of a contract.
The essentials of insurance contracts are as follows:
1. Agreement
Agreement means communication by the parties to one another of their intentions to create legal relationship. For a valid contract of insurance, there must be an agreement between the parties, i.e. one making offer or proposal and another accepting the proposal or signifying his acceptance upon proposal.
2. Free consent
There must be free consent between the parties to contract. Consent means that parties to an agreement must agree on a specific thing in the same sense or their understanding should be the same. Consent must be given by the parties thereto in a contract, freely, independently, without any fear and favor. The consent is known to be free when it is not caused by, fraud, misrepresentation, mistakes and other undue influences .
3. Components to contract
The parties in an agreement must be legally competent to enter into the contract. It means both parties in the insurance contract must be age of majority, posses sound mind and not disqualified by any ;aw of the country. It clears that a person who is minor, lunatics, idiot and alike cannot enter into a insurance contract. The contract entered into by these will be declared as void.
4. Lawful object
In insurance contract, the object of the contract must be lawful as in other types of contracts. The agreement must not relate to a thing which is contrary to the provision of any law or has expressly been forbidden by any law. It must not be of such nature that if permitted, it implies injury to the person or property of other or immoral or opposed to public policy.
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5. Lawful consideration
There must be due and lawful consideration in the insurance contract. The consideration, for which the contract is entered and created by the parties, must be lawful. To establish legal relationship, to create obligation between them and to make it enforceable by law there must be lawful consideration.
6. Compliance with legal formalities
To make an agreement valid, prescribed legal formalities of writing, registration, etc. must have been observed. In the contract of insurance, the agreement between parties must be in written form and dully signed by both parties, properly attested by witness and registered otherwise, it may not be enforced by the court.
