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Consideration

A contract that is not under seal must have consideration to be valid.  Consideration is the premium paid by the insured and the promise of payment if a claim occurs is considered consideration by the life office.   Contracts not issued under dead are termed as having   been issued ‘under hand’ and under the Limitation Act 1980 legal action can not be taken under such contracts after six years have lapsed from accrual of the right of action date.

If the contract was issued under seal legal action must be taken within 12 years after the accrual of the right to take legal action.

Capacity to contract

Both the parties to the contract must have the legal capacity to contract, and there are some English laws which restrict this capacity to contract.

Minors

Under the Family Law Reform Act 1969 a minor or infant in English law is a person under the age of 18.   Subject to certain exceptions contracts made by minors are not enforceable against them, although the minor maybe able to enforce the contract.   Contracts of ‘necessaries’ and certain contracts of employment beneficial to the minor are enforceable against them.   Other contracts are valid unless the minor repudiates the contract either before the age of 18 or a reasonable time after attaining the age of 18.   Because of this most life offices will not do business with proposers under the age of 18.   Some will subject to parental consent, although this would not negate the minors right to cancel the contract.

In Scottish law under the Age of Legal capacity ( Scotland) Act 1991 a person under the age of 16 can enter into a contract so long as it is a contract of the type commonly entered into by person of their age and circumstances and on terms which are not unreasonable.   A life insurance contract might not be considered as falling within this category but it could depend on the circumstances. Also under Scottish law any one has up to the age of 21 to apply to the court to set aside a contract entered into at age 16 to 17 which is prejudicial. Prejudicial is deemed where an adult when exercising his reasonable prudence would not have entered into such a contract.
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