Part 2: Legal Principles
Paper I — Principles and Practice of Insurance · Part 2: Legal Principles
Further reading: Legal Principles study notes →
Under common law, what is the most accurate definition of a contract?
Why: A contract is a legally enforceable agreement between two or more parties. Not every agreement is a contract — it must have all essential elements (offer/acceptance/consideration etc.). A is wrong because a mere agreement is not necessarily enforceable; C is wrong because simple contracts can be oral; D is wrong because contracts are not limited to monetary dealings.
Which statement about a simple contract is correct?
Why: A simple (parol) contract may be oral, written, or partly oral and partly written. A describes a specialty contract (under seal), which must be in writing and sealed. B is wrong because simple contracts are not limited to oral form; D is wrong because no lawyer witness is required.
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