Four elements of a valid contract
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Offer and acceptance, consideration, competent parties, legal purpose.
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Consideration need not be equal: premium + application statements vs. the insurer's promise.
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CA §10112: minors may contract for life insurance; under 16 needs a parent's or guardian's written consent.
Five special features of an insurance contract
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Unilateral: only the insurer is legally bound to perform.
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Adhesion: ambiguities are read in favor of the insured.
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Aleatory: unequal exchange of value that depends on chance.
Indemnity, utmost good faith and concealment
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Indemnity = make whole; no profit from a loss.
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§331: intentional OR unintentional concealment allows rescission.
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§334: materiality = probable and reasonable influence on the other party, not the outcome.
Representations, warranties, waiver and estoppel
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Representation = true to the best of knowledge; only a material falsehood allows rescission (§359).
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Warranty = guaranteed true; breach of a material warranty allows rescission (§447).
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§10113: absent fraud, the insured's statements are representations, not warranties.