LML4805 PORTFOLIO MEMO - MAY/JUNE 2023 - SEMESTER 1 - UNISA - (DETAILED MEMO- DISTINCTION GUARANTEED)

LML4805 PORTFOLIO MEMO - MAY/JUNE 2023 - SEMESTER 1 - UNISA - (DETAILED MEMO- DISTINCTION GUARANTEED) Question 1 (a) Distinguish between the essential features of an insurance contract and the general requirements of a valid contract; then address the consequences if any of these are absent. In your answer, also mention one example of an essential feature of an insurance contract and one example of a validity general requirement of a contract. (5) (b) Describe any two informal risk-spreading mechanisms in the “popular economy” and critically analyse their relevance to the current South African insurance industry (5) (c) Discuss the ways in which a third party may acquire rights under the insurance contract. Provide an explanation and an example in every instance. (5) (d) Analyse the similarities and differences between an insurance contract and a suretyship contract. (6) (e) There is a distinct difference between an insurance contract, an insurance policy, a proposal form for insurance cover, and a cover note. Explain the difference between these insurance law concepts. (4) [25] Question 2 (a) Mark buys a new vehicle. While still at the dealer’s premises, he takes out insurance from an insurance agent who has an office in these premises. He completes a proposal form and the agent assures him that as he had paid the first premium, the vehicle is covered as from that moment. On driving out of the dealership, Mark is involved in an accident in which his new vehicle is written off. The insurer refuses his claim for an indemnity on the basis that at the time of the accident the vehicle was not (yet) covered. The insurer explains that although its agent was authorised to receive premiums, he had no authority to provide insurance cover. Advise Mark on his legal position. (5) (b) Priya is the owner of a motor vehicle that she has insured with the avengers Insurance Company. She sells the vehicle to her cousin who takes delivery of the vehicle, and also takes over the insurance policy on it from Priya. When the vehicle is stolen and the cousin claims against the insurer, the latter denies liability. At the request of her cousin, Priya claims from the insurer but again the claim is unsuccessful. Advise the cousin of Priya on her legal position. (5) (c) Makena insures his vehicle comprehensively. In the insurance application form, which is incorporated into the policy, Makena undertakes and warrants to keep the vehicle locked at all times and to keep the keys locked in a safe overnight. One night the locked vehicle is damaged by fire. It appears, though, that the vehicle’s keys were not locked in a safe at the time and the insurer refuses Makena’s claim on the basis of his breach of warranty. Comment on the validity of Makena’s claim and of the insurer’s defence (5) [15] Question 3 (a) Discuss the importance of the decision in Mutual and Federal Insurance Co Ltd v Oudtshoorn Municipality 1985 (1) SA 418 (A) in at least four areas of insurance law. (Note: do not recount the facts of the case.) (10) (b) With reference to case law, discuss whether a husband has an insurable interest in property belonging to his wife. [Please note the matrimonial property system is not the issue here]. (5) (c) List two features or concepts of an insurance contract that may not necessarily be regarded as distinguishing features of an insurance contract. Your answer should also include academic arguments as to why those two features should not be regarded as such. Refer to relevant authority. (5) [20] Question 4 With reference to case law, write short explanatory notes on the following 3 (three) statements: (a) “Being of English origin, the doctrine of subrogation is either not part of our law or, if it is, it may now be evicted from our law.” (5) (b) “The one aspect of the insurer’s right of subrogation, namely its entitlement as against the insured to enforce the latter’s claim against a third party, involves the insurer litigating in the name of the insured.” (5) (c) The other aspect of the insurer’s right of subrogation, namely the insurer’s entitlement as against the insured to recover from the latter what he may have received from the third party, may be explained with reference to the general principles of our law. THE END TOTAL [75]