Competency of parties:
The parties to the agreement must be competent to contract. The insurance will be competent to contract if he has got a license to carry on insurance business.
- Every individual is competent
- Who are the age of majority according to the law to which they are subject.
- Who are sound mind
- Who are not disqualified from contracting by any law to which they are subject.
It indicates that a minor is not competent to enter into contract. If the life insurance policy is issued to minor, the insurer cannot reject it during his minority. At the attainment of the age of majority, he has to exercise the option within a reasonable time, whether he would continue to carry on the policy or not. A person who is unsound mind is also not capable of entering contract. An alien enemy, an undercharged insolvent and criminals cannot enter into a valid contract.
Principle of Insurance – Essay – View