Legal Principles and the Law of Contract
Formation of a contract
A contract requires offer, acceptance, consideration, intention to create legal relations and capacity. Acceptance must mirror the offer exactly; a counter-offer destroys the original offer (Hyde v Wrench). Advertisements and goods displayed in a shop are generally invitations to treat, not offers - a common trap. Consideration is the exchange element: the premium supports the insurer's promise to pay. Acceptance by post is effective on posting unless the parties intended otherwise. Minors (under 18), people lacking capacity and the intoxicated may be able to avoid contracts, which are generally voidable, not void.
Validity and vitiating factors
Know the difference between void (no legal effect), voidable (valid until avoided) and unenforceable. A false statement of fact that induces a contract is misrepresentation; under the Misrepresentation Act 1967 s.2(1) the injured party may claim damages, and the representor must prove they had reasonable grounds for the statement. Duress, undue influence and illegality can also invalidate.
Terms and exclusion clauses
Conditions are major terms (breach allows termination plus damages); warranties are minor (damages only); innominate terms are judged by the effect of the breach. Exclusion clauses must be incorporated by signature or reasonable notice, are construed narrowly against the person relying on them, and are controlled by the Unfair Contract Terms Act 1977 (business-to-business) and the Consumer Rights Act 2015 (consumers). Neither permits exclusion of liability for death or personal injury caused by negligence.
Agency
An agent binds the principal with actual authority (express or implied) or apparent authority arising from a holding out by the principal. In insurance, brokers usually act for the insured, not the insurer.
Rule of thumb: if a pre-contract statement is one a reasonable person would treat as a promise and rely on, it is a term, not a mere representation - and the remedies differ.