Ex. 1. Read and translate the text. Ex. 2. Paraphrase the following sentences using the words and phrases from the text:

Ex. 2. Paraphrase the following sentences using the words and phrases from the text:

The law of sales derives from contract law.

The sale of goods is involved in sales law.

The law of sales comes from contract law since a sales agreement is a special kind of contract.

The title to goods is transferred to the buyer when the buyer pays the purchase price to the seller.

A sale is a transfer of all the rights that the seller has in a specific object from the seller to the buyer.

Sales law is concerned with the sale of goods or services for money.

If sellers do not honour their obligations, the buyers have several options.

They can buy the same product elsewhere.

The buyer can call off the contract, turn down delivery, and claim the return of any deposit.

Many stereo systems are guaranteed for 90 days.

(involves, for a price; derives, sales transaction; are warranted; sales law; transfer of title to goods; cancel refuse demand; sellers have not lived up to their bargain; all the rights that the seller has in a specific object; purchase; sales law involves)

Ex. 3. Fill in the blanks with the appropriate words and phrases:

F A sales agreement or … is a special kind of contract.

F A sale is a transfer … from the seller to the buyer for a price.

F The objects that may … may be movable or immovable.

F Sales law … ancient English law.

F Many of … were adopted in the United states as part of common law.

F The Uniform Commercial Code (UCC) is … it determines the rights of buyers and sellers in a transaction.

F Under the UCC, buyers who believe that sellers …, have several options.

F They can buy the same product elsewhere and … to recover any losses they may have incurred.

F A warranty is a … that the goods will be of a certain quality.

F If they …, they can be returned for a full refund.

F An implied warranty is ….

F Implied warranties include the notion that … made by advertisements.

(goes back to; a product fulfils the promise; sales transaction; a guarantee by a seller; a comprehensive commercial law; sue the original contract; thus be transferred; malfunction within that period; these customs and practices; of title to goods; have not lived up to their end the bargain; one that is dictated by law)

Ex. 4. Complete the following sentences using words and phrases from the text:

F Sales law involves the sale of goods or services ….

F Sales law is concerned with the transfer of ….

F The objects that may thus be ….

F Many of these customs and practices were adopted in the United states ….

F The Uniform Commercial Code (UCC) describes ….

F The buyers can sue the original contract to recover ….

F The sellers can cancel the contract withhold delivery and ….

F A warranty is a guarantee by a seller that the goods ….

F Warranties may be ….

F Many stereo systems ….

F More and more dissatisfied customers are using ….

(will be of a certain quality; the rights of buyers and sellers in a transaction; movable or immovable and tangible or intangible; tort law to sue producers; for money or on credit; any losses they may have incurred; as part of common law; express or implied; sell the goods to other buyers; are warranted for 90 days; tangible personal property)

Ex. 5.Answer the following questions

1. What does the law of sales derive from?

2. What kind of contract is a sales agreement?

3. What does the sales law involve?

4. What is the sales law concerned with?

5. What is a sale?

6. What happens when the buyer pays the purchase price to the seller?

7. What did ancient English law consist of?

8. What was adopted in the United States as part of common law?

9. What did the UCC provide?

10. What is the UCC?

11. What can buyers do under the UCC?

12. What can sellers do under the UCC?

13. What is a warranty?

14. What is an express warranty?

15. What is an implied warranty?

16. What does often happen to warranties?

17. What do dissatisfied customers do?

Ex. 6. Ask questions to fit these answers:

1. The law of sales derives from contract law.

2. A sales agreement or sales transaction is a special kind of contract.

3. A sale is a transfer of title to goods.

4. Sales law is concerned with the transfer of tangible personal property.

5. All the rights that the seller has in a specific object are transferred to the buyer when the buyer pays the purchase price to the seller.

6. Uniform Commercial Code provides uniformity in all commercial laws including sales law.

7. The UCC describes the rights of buyers and sellers in a transaction.

8. Under the UCC, buyers can cancel the contract.

9. Under the UCC, sellers have several options.

10. Warranties can be express or implied.

Ex. 7. Read the text and match these headings with the paragraphs:

– A sales agreement is a special kind of contract.

– Sales law goes back to ancient English law.

– UCC – Uniform Commercial Code.

– Under the UCC the buyers have several options.

– Under the UCC the sellers have several options.

– Article 2 of the UCC.

– Express warranties.

– Implied warranties.

Ex. 8. Make up an oral summary of the text using the headings from ex. 7.

TEXT B

The Sale of Goods:

A Brief History

Until about one hundred years ago, consumers and retailers usually knew each other personally, and so conducted business on a personal basis. The sale of goods and services was conducted by the rule caveat emptor, “Let the buyer beware”. Buyers knew the reputation of the merchants from whom they bought goods. The merchandise was unpacked, so it could be readily examined in the marketplace in the presence of the maker. This also meant that the merchant could not display one item, then replace it with another, inferior one at the time of purchase. If the goods were not satisfactory, the buyer would simply refuse to buy them, following caveat emptor. Thus, buyers and sellers were equal in bargaining power.

The sale of goods today is conducted quite differently. Consumers buy mass-produced, pre-packaged goods made in a factory that can be thousands of kilometers away. The personal relationships that once existed between buyers and sellers have, almost, vanished. Consumers have the option of buying goods from one of many retailers selling the same product. At the same time sales clerks have little experience with or knowledge of the goods they are selling. Should an item not work, the retailer can disclaim responsibility, telling consumers to seek a remedy from the distant manufacturer. The consumer thus can be caught in the trap of not knowing the quality of a purchased product. And the consumer will receive no satisfaction when a purchased product does not perform as expected.

With such problems facing today’s consumers, governments and private organizations have realized the need to protect consumers and restore the equality of bargaining power that once existed between buyers and sellers.

Notes:

Conduct business	–	вести справу, мати справу
on a personal basis	–	на основі особистого знайомства
caveat emptor (Lat.)=let the buyer beware	–	нехай покупець стережеться
reputation	–	репутація
merchandise	–	товар
marketplace	–	ринок
display	–	виставити, показати
replace	–	замінити
inferior	–	(тут) низької якості
be equal in bargaining power	–	мати рівну ринкову владу (продавця і покупця) у відстоюванні своїх інте-ресів
mass-produced	–	масове виробництво
pre-packed	–	упакований
vanish	–	зникати
option	–	вибір
retailer	–	роздрібний продавець
disclaim	–	відмовитися, не визнавати
responsibility	–	відповідальність
seek	–	шукати, добиватися
remedy	–	засіб судового захисту
protect	–	захистити
restore	–	відновити

Answer the following questions:

1. Did consumers and retailers know each other many years ago?

2. How did they conduct business at that time?

3. What rule was the sale of goods and services conducted by?

4. Who knew the reputation of the merchants?

5. Why could the merchandise be readily examined in the marketplace?

6. Could the merchant display one item and replace it with another?

7. How is the sale of goods conducted today?

8. What can you say about personal relationships between the buyer and the seller?

9. What option do the consumers have?

10. Can the retailer disclaim responsibility if the item does not work?

11. Does the consumer know the quality of a purchased product?

12. Is it necessary to protect consumers?

Exercises in Writing

Ex. 1. Write two paragraphs on:

The sale of goods and services about one hundred years ago;

The sale of goods today.

Ex. 2. Translate the following sentences from Ukrainian into English.

1. Багато років тому споживачі та продавці знали один одного особисто.

2. Угоди проводились на умовах особистого знайомства.

3. Продаж товарів та послуг здійснювали за правилом: “нехай покупець стережеться”.

4. Товар не був упакований, покупець міг вільно ознайомитися з ним.

5. Продавець не міг виставити на продаж один товар, а потім замінити його на інший, неякісний.

6. Якщо товари були неякісні, покупці відмовлялися купувати такі товари.

7. Таким чином, покупець та продавець мають рівну ринкову владу у відстоюванні своїх інтересів.

8. Зараз продаж товару здійснюється по-іншому.

9. Споживачі купують товари масового виробництва.

10. Особисті відносини, які існували між продавцем та покупцем раніше, вже не існують.

11. Продавці майже не знають нічого про товар, який вони продають.

12. Таким чином, покупець може потрапити в пастку, не знаючи нічого про якість товару.

13. Продавець може відмовитися від відповідальності за неякісний товар.

14. Враховуючи ці проблеми, урядовці та приватні організації зрозуміли необхідність захисту споживачів.

Oral Topic: Sales: Introduction to the Law of Sales..

Discuss this topic using Exrs. 7,8 for Text A and Ex. 1 for Text B.

UNIT 10

Bankruptcy Law and Business

Study the following vocabulary notes for the text:

Bankruptcy	банкрутство
go bankrupt	стати банкрутом, збанкрутувати
file for bankruptcy	подати заяву (до суду) про визнання банкрутства
be judged bankrupt	бути визнаним банкрутом (згідно з судовим рішенням)
procedure	процедура
honest	порядний, чесний
insolvent	неплатоспроможний
debtor	боржник
release	звільняти
be released	бути звільненим від чого-небудь (від боргів)
modify	змінювати, модифікувати
‘banca rotta’ or ‘broken bench’	“розбита лавка”
creditor	кредитор
medieval	середньовічний
merchant	купець
bill	рахунок, вексель
slavery	рабство
be jailed	бути ув’язненим
debtor prison	боргова в’язниця
make a fresh start	почати все знову
seek	шукати, намагатися
relief	звільнення (від неприємностей, боргів)
relief	допомога
court	гарантований судом дозвіл
drop in farm produce prices	падіння цін на сільськогосподарські про-дукти
cash-flows	потік готівки
involuntary	не за власним бажанням, недобровільно
voluntary	за власним бажанням, добровільно
force	змушувати, примушувати
proceedings	судочинство, розгляд справи у суді
initiate	ініціювати, починати
indebted	боржник
owe	заборгувати
court protection	судовий захист
petition	петиція, прохання, заява
assets	активи
income	прибуток
liability	зобов’язання, борг
repayment	повернення (боргів)
budget	бюджет, сума грошей
‘exempt assets’	активи (майно), що не підлягають продажу (те, що залишається божникам)
excessive	занадто великий, надмірний
set up a plan	розробити план

Translate the following sentences into Ukrainian:

Bankruptcy is a system of procedures by which an insolvent debtor may be released from or can modify debt obligations.

Under the U.S. Constitution, bankruptcy is a matter of federal law.

In ancient Greece and Rome the insolvent debtor could be sold into slavery.

At one time, those who could not pay their debts were jailed.

Filing for bankruptcy is the court granted permission not pay some or all debts.

Bankruptcy can be involuntary or voluntary.

Under involuntary bankruptcy, bankruptcy proceedings are initiated by the creditors of an indebted firm.

The first step in ‘going bankrupt’ voluntarily involves filing a petition in a bankruptcy court.

The bankruptcy petition must include a plan for dealing with creditors.

‘Exempt assets’ are those assets the bankrupt person is allowed to keep.

The bankruptcy procedure allows the individual to make a fresh start.

TEXT A

Bankruptcy Law and Business

Bankruptcy, in law, is a system of procedures by which an honest but insolvent debtor may be released from debt obligations; or the debtor can modify his debt obligations. The term bankruptcy is derived from ‘banca rotto’ or ‘ broken bench’ because creditors in medieval Italy would break up the benches of merchants who did not pay their bills. In ancient Greece and Rome the insolvent debtor could be sold into slavery or could be jailed. But the days of debtor prisons are in the past.

Today the bankruptcy procedure allows the individual or company to make a fresh start. Companies and individuals can seek relief by filing for bankruptcy – the court-granted permission not to pay some or all of their debts. Cash-flow problems and drops in farm produce prices have caused many farmers, banks and small businesses to go bankrupt in recent years.

Bankruptcy can be involuntary or voluntary. In some cases, creditors force an individual or firm into involuntary bankruptcy.

Under involuntary bankruptcy, bankruptcy proceedings are initiated by the creditors of an indebted firm or individual. The creditors may request that a party be judged bankrupt and they hope that the courts will award them payment of at least part of what is owed them.

Far more often, however, a person or business chooses to file for court protection against its creditors. Under voluntary bankruptcy, bankruptcy proceedings are initiated by an indebted firm or individual. Laws allow individuals and firms to file for voluntary bankruptcy.

The first step in ‘going bankrupt’ voluntarily involves filing a petition in a bankruptcy court. By law, businesses filing for bankruptcy must use a federal court. Individuals can use state courts. The bankruptcy petition must provide a thorough and honest picture of the assets, income and liabilities of the individual or business. It also must include a plan for dealing with creditors.

When an individual files for bankruptcy, a repayment plan is worked out, a budget is imposed on the person by the court, and almost all the person’s assets are sold for repayment of debt. Bankruptcy law allows a person to set up a three-year debt repayment plan, the bankruptcy judge can extend the time to five years.

But there are so called ‘exempt assets’ – those assets the bankrupt person is allowed to keep (homes, cars, furniture, clothes and other personal property). And the court often allows people to keep other assets if they are not excessive and if debts can still be repaid on a regular basis.

Exercises

Ex. 1. Read and translate the text.

Ex. 2. Paraphrase the following sentences using the words and phrases from the text:

An individual must present a plan to pay off the creditors.

The bankruptcy procedure gives an individual a possibility to start business again.

At one time those who could not pay their debts were jailed.

The law of bankruptcy provides a method by which an honest but insolvent debtor may be discharged or freed from the obligation to repay his debt.

The days of debtor prisons are long past.

There are two types of bankruptcies.

The creditors may demand that a party be judged insolvent.

Very often, however, a person or business decides to petition for court protection against its creditors.

Bankruptcy law allows a person to work out a repayment plan.

Cash-flow problems, drops in farm produce prices have forced many farmers, banks and small businesses to file for bankruptcy.

(a three-year debt repayment plan; allows, to make a fresh start; debtors; be released from debt obligations; are in the past; bankruptcy can be involuntary or voluntary; request, bankrupt; far more often, chooses to file for; to set up a three-year debt repayment plan; have caused, to go bankrupt)

Ex. 3. Fill in the blanks with the appropriate words and phrases:

F The term bankruptcy is derived from … because creditors in medieval Italy would break up benches of merchants who did not pay their bills.

F Bankruptcy, in law, is a system of procedures by which … may be released from debt obligations.

F Companies and individuals can … – the court-granted permission not to pay some of their debts.

F In some cases creditors … or firm into involuntary bankruptcy.

F The creditors … that a party … bankrupt.

F However, a person or business … against its creditors.

F The first step … voluntarily involves … in a bankruptcy court.

F There are … – those assets the bankrupt person is allowed to keep.

F By law, businesses … must use a federal court.

F Bankruptcy law allows a person to set up … plan.

F The bankruptcy petition must provide … picture of the assets, income and liabilities of the individual or business.

(filing for bankruptcy; a thorough and honest; force an individual; in “going bankrupt”, filing a petition; “banca rotta” or “broken bench”; a three-year debt repayment; seek relief by filing for bankruptcy; choose to file for court protection; an honest but insolvent debtor; ”exempt assets”; may request, be judged)

Ex. 4. Complete the following sentences:

F In ancient Greece and Rome the insolvent debtor could ….

F But the days of …. Today the bankruptcy procedure allows the individual or company ….

F Companies and individuals can seek relief …

F Cash-flow problems and drops in farm produce prices have caused many farmers, banks and small businesses ….

F Bankruptcy can be ….

F In some cases, creditors force an individual or firm ….

F Laws allow individuals and firms ….

F The creditors may request that a party be judged bankrupt and they hope that court will award them payment ….

F The first step in “going bankrupt” voluntarily involves filing a petition ….

F Individuals filing for bankruptcy can ….

F The bankruptcy petition must include a plan ….

(to go bankrupt in recent years; for dealing with creditors; of at least part of what is owed then; be sold into slavery; to file for voluntary bankruptcy; by filing for bankruptcy; in a bankruptcy court; into involuntary bankruptcy; debtor prison are in the past; involuntary or voluntary; to make a fresh start; use state courts)

Ex. 5. Answer the following questions:

1. Who may be released from debt obligations?

2. What is bankruptcy?

3. What can the debtor modify?

4. What is the term bankruptcy derived from?

5. What could happen to insolvent debtor in ancient Greece and Rome?

6. Could the insolvent debtor be jailed in ancient Greece?

7. What does the bankruptcy procedure allow the individual or company today?

8. Why do companies file for bankruptcy?

9. What caused many farmers and banks to go bankrupt?

10. What are the two types of bankruptcy?

11. What do laws allow individuals and the firms?

12. What is the first step in “going bankrupt”?

13. What must the bankruptcy petition provide?

14. When is a repayment plan worked out?

15. What are “exempt assets”?

Ex. 6. Ask questions to fit these answers:

1. The term bankruptcy is derived from “banca rotta” or “broken bench”.

2. Creditors in medieval Italy would break up the benches of merchants who did not pay their bills.

3. In ancient Greece and Rome the insolvent debtor could be sold into slavery.

4. The debtor can modify his debt obligations.

5. The insolvent debtor could be jailed in ancient Greece and Rome.

6. Today the bankruptcy procedure allows the individual or company to make a fresh start.

7. Bankruptcy can be involuntary or voluntary.

8. In some cases, creditors force an individual or firm into involuntary bankruptcy.

9. The first step in “going bankrupt” voluntarily involves filing a petition in a bankrupt court.

10. By law, businesses filing for bankruptcy must use a federal court.

11. The bankruptcy petition must include a plan for dealing with creditors.

12. But there are so called “exempt assets” – those assets the bankrupt person is allowed to keep.

Ex. 7. Read the text and match these headings with the paragraphs:

– Bankruptcy: the definition.

– Bankruptcy procedure.

– Types of bankruptcy.

– Involuntary bankruptcy.

– Voluntary bankruptcy.

– ‘Going bankrupt’.

– Setting up a repayment plan.

– ‘Exempt assets’.

Ex. 8. Make up an oral summary of the text using the headings from ex. 7.

TEXT B

Business bankruptcy

Although bankruptcy traditionally has been viewed as a last resort, thousands of federal bankruptcy cases are filed each year.

Businesses can also go bankrupt. A business bankruptcy may be resolved through one of three methods: a liquidation plan, a repayment plan, or a reorganization.

Under a liquidation plan, the business ceases to exist, the assets of the business are sold and the proceeds of the sale are used to pay creditors.

Under a repayment plan, the bankrupt company simply works out a new payment schedule to meet its obligations. The time for repayment is usually extended and payments are collected and distributed by a court-appointed trustee. Business reorganization is the most complex form of business bankruptcy. Under reorganization the company explains what led to its financial difficulties and proposes a new arrangement for remaining in business. The reorganization may include a new rate of managers and a new financial strategy; business is continued by its management or a trustee. A judge may also reduce the company’s debts in order to ensure its survival. While creditor dislike such debt reduction, they may nevertheless agree to the proposal – after all receiving 50 percent of what is owed them is better than getting nothing at all. Reorganization in the United States was the path taken by many companies.

Bankruptcy is a risky proposition. You may be substituting one set of financial problems for another. For example, you may be unable to get credit card, car loan or mortgage for many years after you declare bankruptcy. Thus going bankrupt should always be viewed as a last resort. In general, it is appropriate only if a business cannot repay its debts and cannot work out satisfactory repayment terms with its creditors on its own.

However in recent years, some corporations have used bankruptcy in novel and advantageous ways. In 1982, the Johns Manville Corporation, a firm with 1 billion in assets, filed for reorganization in order to handle massive tort claims from workers exposed to asbestos in the work place over several decades. That same year, Frank Lorenzo used bankruptcy to break up unions at Continental Airlines. The purpose of Continental’s recent bankruptcy declaration was to buy time to cut cost and return profitability.

Notes:

Proceeds	–	гроші, одержані від продажу; виручка
view	–	вважати, розглядіти
last resort	–	останній засіб захисту
resolve	–	вирішувати, владнати
liquidation	–	ліквідація
reorganization	–	реорганізація
cease to exist	–	припинити існування
work out	–	розробляти
schedule	–	схема, план
meet	–	(тут) задовольняти
obligations	–	зобов’язання
collect	–	збирати
distribute	–	розподіляти
trustee	–	опікун, піклувальник
lead (led, led)	–	вести (до чогось)
arrangement	–	домовленість, умови, засоби
new rate of managers	–	новий тип керівників вищої кваліфі-кації
financial strategy	–	фінансова стратегія (політика)
reduce	–	скоротити, зменшити
reduction	–	скорочення
ensure	–	забезпечити
survival	–	виживання
terms	–	умова
risky	–	ризикований
substitute	–	замінити (змінити)
mortgage	–	іпотечна позика, закладна, іпотека
declare	–	заявляти
appropriate	–	підходящий
novel	–	новий, новітній
advantageous	–	вигідний, сприятливий
handle	–	вирішити, справитися
tort claims from workers exposed to asbestos	–	скарги з боку працівників, які працювали з азбестом
buy time	–	(тут) виграти час
cut cost	–	скоротити витрати

Answer the following questions:

1. Can a business go bankrupt?

2. How may a business bankruptcy be resolved?

3. What happens to a business under a liquidation plan?

4. When does the bankrupt company work out a new payment schedule?

5. Who collects and distributes payments?

6. What is the most complex form of resolving business bankruptcy?

7. When does the company explain why it has financial difficulties?

8. What may the reorganization include?

9. Who runs the business under the process of reorganization?

10. What can a judge do for a company?

11. What proposition is bankruptcy?

12. When is “going bankrupt” appropriate?

13. How have corporations used bankruptcy in recent years?

Exercises in Writing

Ex. 1. Write two paragraphs on:

Methods of resolving business bankruptcy.

Ex. 2. Translate the following sentences from Ukrainian into English.

1. Підприємство може збанкрутувати (стати банкрутом).

2. Справу про банкрутство підприємства можна вирішити одним з трьох методів: розробити план його ліквідації, скласти план повернення боргів або реорганізувати підприємство.

3. Згідно з планом ліквідації підприємство припиняє існування.

4. Кошти від продажу активів підприємства використовують для того, щоб сплатити борг кредиторам.

5. Згідно з планом повернення боргів збанкрутіла фірма розробляє нову схему платежів, щоб виконати свої зобов’язання перед кредиторами.

6. Піклувальник, який призначається судом, збирає і розподіляє платежі.

7. Реорганізація бізнесу – це найсерйозніша форма банкрутства підприємства.

8. Компанія повинна пояснити причини її фінансових труднощів.

9. Компанія повинна запропонувати нові умови, щоб залишитися в бізнесі.

10. Процес реорганізації може включати нову фінансову стратегію.

11. Суддя може зменшити борг компанії, щоб забезпечити її виживання.

12. В США реорганізація стала шляхом, який вибрали багато компаній.

13. Банкрутство – це дуже ризикована процедура.

14. Таким чином, банкрутство завжди треба розглядати як крайній вихід.

Oral Topic: Bankruptcy Law and Business.

Discuss this topic using Exrs. 7,8 for Text A and Ex. 1 for Text B.

UNIT 11

Insurance Law. Insurance Contract

Study the following vocabulary notes for the text:

Endeavor	спроба, (тут) починання
venture	підприємство, часто, ризиковане під-приємство
involve	включати
financial	фінансовий
loss	втрата
insurance	страхування
(a) means	засіб
transfer	передати
shift	перемістити
equitable	справедливий
manufacturer	виробник
produce	виробляти
market	продавати
Bicycle	велосипед
swing	гойдалка
slides	санчата
pose	створювати, становити
injury	ушкодження
result in	привести до …
lawsuit	судовий позов, судова справа
survive	вижити
hardship	труднощі
design	проект
marketing	маркетинг
assume	допускати, прийняти
share	поділяти, ділити
insurer	страхувач
purchase	купівля
policy	поліс, страховий поліс
coverage	покриття
insured	застрахований
policyholder	той, хто має страховку
issue	випускати, видати
enforceable agreement	угода, що має юридичну силу
offer	пропозиція
acceptance	прийняття, акцент
consideration	зустрічне задоволення
legal purpose	законна ціль
application	звертання, заява
binder (a temporary cont-ract)	тимчасовий страховий документ
oral	усний
bind	зобов’язати
receipt	надходження
issuance	видання, випуск
transaction	угода
premium	страхова премія, страховий внесок
minor	неповнолітній
contingency	випадок, непередбачувана ситуація
occur	траплятися
illegal	незаконний
void	не дійсний, той, що немає юридичної сили
be in writing	бути в письмовій формі

Translate the following sentences into Ukrainian:

Insurance is a means of transferring risk from the individual or business to a group whose members agree to share losses on some equitable basis.

The use of some products poses considerable risk.

The use of bicycles, swings and slides may result in an injury or death.

An injury or death caused by such products may result in a lawsuit and substantial damages award to the injured user.

The manufacturers can transfer the risk to a professional risk bearer, the insurer through the purchase of an insurance contract.

An insurance contract is often called a policy.

The company issuing the insurance policy is called the insurer or the insurance company.

To be an enforceable agreement a contract of insurance must contain the essential elements of contract.

Most insurance contracts are required by state law to be in writing.

TEXT A

Insurance Law

Almost every type of endeavor or venture, individual or business involves risk or uncertainty, concerning financial loss. Insurance is a means of transferring or shifting risk from the individual or business to a group whose members agree to share losses on some equitable basis. Suppose that a manufacturer produces and markets a line of products such as bicycles, swings and slides. The use of these products poses considerable risk. An injury or death caused by such products may result in a lawsuit and substantial damages award to the injured user; or if the product has caused death, to his or her surviving family. Such awards may be in the millions of dollars and may cause extreme economic hardship to an individual manufacturer. The design, manufacture and marketing of a potentially dangerous product may pose a risk too great for a single business to assume.

Manufacturers can collectively share products liability losses. They can transfer the risk to a professional risk bearer, the insurer, through the purchase of an insurance contract.

An insurance contract is often called a policy. The person or company purchasing insurance coverage is called the insured or the policyholder. The company issuing the insurance policy is called the insurer or the insurance company. To be an enforceable agreement a contract of insurance must contain the essential elements of contract: offer and acceptance, consideration, legal purpose, competent parties and legal form.

The offer is made by the prospective insured when he or she makes application for the desired coverage. The acceptance occurs when the agent or broker issues a binder (a temporary contract) or when a policy itself is issued by the insurance company. A binder can be either written or oral and is used to bind the company immediately prior to the receipt of the application and issuance of the policy.

The considerations exchanged in an insurance transaction are the payment of the premium by the insured or other responsible party (such as the parents of an insured minor) and the promise of the insurer to pay if the covered contingency occurs. A contract made for an illegal purpose, or containing an illegal provision, is usually void and cannot be enforced by either party. This general principle is equally applicable to contracts of insurance. Most insurance contracts are required by state law to be in writing; the policyholder also must be of sufficient age.

Exercises

Дата добавления: 2015-10-29