CII I11 key terms

Body of law built up from decisions of judges in individual cases, applied consistently through precedent rather than laid down by Parliament in statute.

A law enacted by Parliament in written form, such as the Financial Services and Markets Act 2000, which takes priority over inconsistent judge-made rules.

The principle that a court must follow the legal reasoning of a higher court in an earlier case with materially similar facts, giving consistency to decisions.

Rules made by a body other than Parliament under powers granted by a statute, for example regulations or orders issued by a government minister.

A clear statement of terms on which the maker is prepared to be bound, communicated to the other party, and capable of becoming a contract on acceptance.

Unqualified agreement to all the terms of an offer, communicated to the offeror, which brings the contract into existence at that moment.

A preliminary communication inviting the other party to make an offer, such as goods displayed in a shop window or most advertisements.

Something of value given by each party in exchange for the other's promise, such as a premium paid in return for cover.

The requirement that the parties meant their agreement to be legally enforceable, presumed in commercial dealings but not in social arrangements.

The legal ability of a person or organisation to enter into a binding contract, which may be limited by age, mental disorder or corporate constitution.

An agreement that has no legal effect from the outset, so neither party can enforce it and rights under it cannot be transferred.

A valid agreement that one party may choose to rescind because of a defect such as misrepresentation, remaining effective until that election is made.

A term or event that must be satisfied before an obligation, such as the insurer's duty to pay a claim, becomes operative.

A term of lesser importance than a condition, breach of which gives the innocent party a right to damages but not to end the contract.

A fundamental term going to the root of the contract, breach of which entitles the innocent party to treat the agreement as ended and claim damages.

A refusal by one party to perform its obligations, or a breach so serious that it shows an intention to abandon the contract, allowing the other to terminate.

A money award ordered by a court to compensate the innocent party for loss caused by breach, aiming to put them in the position performance would have produced.

The duty on both parties to an insurance contract to deal openly and honestly with each other, underpinning the disclosure and fair presentation obligations.

The insured's obligation to disclose every material circumstance it knows or should know, in a manner clear and accessible to a prudent underwriter.

Information that would influence the judgement of a prudent underwriter in deciding whether to accept the risk and on what terms and premium.

Failure by the insured to reveal a material circumstance it was obliged to disclose, which may entitle the insurer to a proportionate or full remedy.

A false or misleading statement of fact made by one party to the other before the contract, which induced the contract and may allow rescission or damages.

A financial relationship with the subject matter such that the insured benefits from its survival and suffers loss from its damage or destruction.

The principle that insurance restores the insured, so far as money can, to the financial position held immediately before the loss, without profit.

The insurer's right, after paying a claim, to stand in the insured's shoes and pursue third parties responsible for the loss, recovering no more than it paid.

The right of an insurer that has paid a claim to recover a proportionate share from other insurers covering the same interest and peril.

A relationship in which one person, the agent, is authorised to act on behalf of another, the principal, and can bind the principal in dealings with third parties.

Authority expressly or impliedly granted by the principal to the agent, defining what the agent is genuinely entitled to do on the principal's behalf.

Authority that appears to a third party to exist because of the principal's words or conduct, binding the principal even where the agent lacked real authority.

A legal obligation to take reasonable care towards others who could foreseeably be harmed by one's acts or omissions.

A civil wrong comprising a duty of care owed to the claimant, breach of that duty, and loss that is caused by the breach and not too remote.

Failure to meet the standard of care expected of a reasonable person in the circumstances, judged against the magnitude of risk and practicability of precautions.

Liability of one party, typically an employer, for wrongs committed by another, such as an employee acting in the course of employment.

The regulator responsible for conduct of business, market integrity and consumer protection, with objectives including securing appropriate protection for consumers.

The regulator within the Bank of England that supervises the safety and soundness of banks, insurers and major investment firms.

The minimum requirements a firm must satisfy, and continue to satisfy, to be authorised to carry on regulated activities in the United Kingdom.

An activity specified in legislation, such as effecting or carrying out contracts of insurance, which may only be carried on by an authorised person or exempt party.

The principle that firms must deliver outcomes consistent with fair treatment throughout the product lifecycle, rather than merely following procedural rules.

The requirement on firms to act to deliver good outcomes for retail customers across products, price and value, consumer understanding and consumer support.

A customer whose circumstances, such as health, capability, resilience or life events, make them especially susceptible to harm and require tailored treatment.