Answer sheet for LESSON 2 questions;

Q: Provide an analysis of these definitions and spot the points of similarity and difference.

Insurance contract is defined under S.475 of the CTA 1984, S.3 of the Insurance and Takaful ACT 2003, in
English common law laid in the case of Prudential Insurance v. Inland Revenue and fourthly in John
Bird’s textbook.

Firstly, the CTA states that insurance contract binds the insurer to pay a sum of money or a benefit to
the insured if the specified dangers occurred. It also states that the payment mentioned is paid in
exchange for a fixed amount or periodic installments that the insured pays.

Secondly, Insurance and takaful act defines insurance as a contract where the insurer pays a sum or
indemnity if the specified risks occurred. In order for the insurer to fulfill their obligations, the insurer
pays a specified amount.

Thirdly, the case defines insurance as a contract where a party promises another whom who paid
money, to pay a sum or a benefit if the specified events occurred. The case highlights that is necessary
of the uncertainty in the insured events, either uncertainty relating to their occurrence or their timing.
for the insured events to be uncertain
Lastly, John Bird defines it as a contract where one party assumes the risk of uncertain events beyond
one’s control, in which there’s an interest for the other party. The definition obligates the party to pay a
sum in the case of occurrence.

Points of similarity:

- It is common in all four definitions that insurance is a contract that involves an exchange of
money/benefit if the specified event/risk materialized.
- It is essentially important for the event/risk insured against to be uncertain.
- There’s an obligation for one party to pay a sum/benefit upon occurrence.

Points of differences:

- The CTA mentions ‘periodic installments’ which is not addressed in other definitions.
- The Takaful act specifically stated that the insurer acts on behalf of the insured, which is not
explicitly mentioned in other definitions.
- John Bird’s definition assigns the assumption of the risk for one party and the interest of the other
one, where other definitions emphasized the obligation to pay based on the insurance contract,
i.e.; contractual obligation rather than named roles.

Q: In light of s. 479, is writing a condition of essential validity of insurance contract, or is it a formality that
does not affect the existence of the contract? ‫ هل الكتابة شرط انعقاد‬Is insurance a formal or informal contract?
If I understood the Q correctly;

s. 479 of the CTA ‘language of insurance’ explicitly states that the contract should be written in Arabic
language. Mentioning the language required to be used, impliedly indicates that a condition must be
written. Generally, ‘insurance’ is a contract and hence is no exception from the general rules of contracts
among which the requirement of writing. Insurance is a formal contract according to common law
jurisdictions; thus, it must typically adhere to specific formalities and contain certain general and
additional conditions in order for it to be valid, legally binding and enforceable. Failure to meet conditions
such as writing the contract may render the contract invalid or more importantly affects the existence of
a contract. Generally, a written, adherent to formalities and singed/sealed contract is a formal contract
under the law unless proved the opposite.

In conclusion an un-written insurance contract is non-existent, and writing is a condition of essential

validity of the insurance contract according to the CTA.

Eman Hindi Ahmed.