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 contract (parol contract) may be oral, written, or partly oral and partly written. A describes a specialty contract, which must be in writing and under seal. B is wrong because a simple contract is not confined to the oral form; D is wrong because neither a lawyer's attestation nor court registration is required.
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