A GUIDE TO REINSURANCE LAW CHAPTER 5 RIGHTS AND OBLIGATIONS OF THE PARTIES

1st Edition, 2007

Chapter CHAPTER 5

RIGHTS AND OBLIGATIONS OF THE PARTIES

TEST YOUR UNDERSTANDING
1. Which of the following statements accurately reflect theapproach of the courts to the construction of reinsuranceagreements?
(a) Any ambiguities in the agreement will be resolved in favour of the reinsured.
(b) Previous negotiations between the parties may be taken into account in ascertaining the meaning of express clauses.
(c) The slip may be taken into account in construing the words of the policy.
(d) The courts must take account of the market background against which the policy was written.
2. Which of the following statements is true?
(a) If the reinsured fails to comply with a condition precedent to the risk, the risk never attaches.
(b) If the reinsured fails to comply with a condition precedent to the risk, the reinsured may recover but may face liability in
damages.
(c) If the reinsured fails to comply with a condition precedent to the risk, the policy may be avoided ab initio.
3. Which of the following statements is true?
(a) If the reinsured fails to comply with a condition precedent to the reinsurers liability, the reinsurers are not liable.
(b) If the reinsured fails to comply with a condition precedent to the reinsurers liability, the reinsured may recover but may
face liability in damages.
(c) If the reinsured fails to comply with a condition precedent to the reinsurers liability, the policy may be avoided ab initio.
(d) A condition precedent to liability may be created only by unequivocal wording.
4. Which of the following statements is true?
(a) If the reinsured fails to comply with a bare condition, the insurers are always able to treat the contract as repudiated.
(b) If the reinsured fails to comply with a bare condition, the insurers are able to treat the contract as repudiated if the
condition is essential to the policy.
(c) If the reinsured fails to comply with a bare condition, the insurers are able to treat the contract as repudiated if the breach
is a serious one.
(d) If the reinsured fails to comply with a bare condition the reinsurers may have the right to refuse to pay the claim but not
to treat the policy as repudiated.
5. Which of the following statements are accurate in relation to warranties?
(a) Breach of warranty automatically terminates the policy.
(b) Breach of warranty automatically terminates the risk.
(c) Breach of warranty renders the policy voidable ab initio.
(d) Breach of warranty is a repudiation of the policy.
6. Which of the following statements are true in relation to the payment of the premium under a reinsurance agreement?
(a) The premium must always be paid by the broker.
(b) The amount of the premium may be varied during the course of a long-term agreement.
(c) Failure to pay the premium allows the reinsurers to treat the policy as repudiated.
(d) Time is of the essence for the payment of the premium.

Informa null - 15/04/2014 16:26

7. Which of the following statements are true in relation to inspection clauses?

(a) An inspection clause is generally expressed as a condition precedent to the liability of the reinsurers.
(b) An inspection clause can be exercised at any time and for any reason, subject to reasonable notice to the reinsured.
(c) An inspection clause cannot be relied upon once the reinsured has commenced proceedings against the reinsurers.
(d) An inspection clause cannot be relied upon during proceedings if the reinsurers purpose is to conduct a fishing
expedition for possible defences.

Robert Merkin