M05 Coursework assignment answer template

Coursework submission rules and important notes

Before you start your assignment, it is essential that you familiarise yourself with the
information in the Coursework Support Centre available on RevisionMate.
This includes the following information:
• These questions must not be provided to, or discussed with, any other person regardless of
whether they are another candidate or not. If you are found to have breached this rule,
disciplinary action may be taken against you.
• Important rules relating to referencing all sources including the study text, regulations and
citing statute and case law.
• Penalties for contravention of the rules relating to plagiarism and collaboration.
• Coursework marking criteria applied by markers to submitted answers.
• Deadlines for submission of coursework answers.
• You must not include your name or CII PIN anywhere in your answer.
• The total marks available are 200. You need to obtain 120 marks to pass this assignment.
• Your answer must be submitted on the correct answer template in Arial font, size 11.
• Answers to a coursework assignment should be a maximum of 12,000 words. The word
count does not include diagrams however, it does include text and numbers contained within
any tables you choose to use. The word count does not include referencing or
supplementary material in appendices. Please be aware that at the point an assignment
exceeds the word count by more than 10% the examiner will stop marking.

Top tips for answering coursework assignments

• Read the Specimen coursework assignment and answer for this unit, available on theunit
webpage.
• Read the Learning Outcome(s) and related study text chapter for each question before
answering it.
• Ensure your answer reflects the context of the question. Your answer must be based on the
figures and/or information used in the question.
• Ensure you answer all questions.
• Address all the issues raised in each question.
• Do not group question parts together in your answer. If there are parts (a) and (b), answer
them separately.
• Where a question requires you to address several items, the marks available for each item
are equally weighted. For example, if 4 items are required and the question is worth 12
marks, each item is worth 3 marks.
• Ensure that the length and breadth of each answer matches the maximum marks available.
For example, a 30 mark question requires more breadth than a 10 or 20 mark question.

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M05 Coursework assignment answer template

Additional M05 coursework tips

It is recommended that you take the following four-step approach when planning an answer to
an M05 question:

 Step One: Identify which area(s) of the law the question is testing and link it back to the
correct Learning Outcome(s).
 Step Two: Explain how the relevant area(s) of the law, in outline, may relate to the context
set out in the question. Identify relevant statute and case law. When quoting law, focus on
the ratio decidendi rather than the general facts of the case.

For further information see chapter 1 of the M05 Study text.

 Step Three: Apply the relevant principles of the law, including statute and case law, to the
question.
 Step Four: Include in your answer a conclusion which directly links back to the question and
relevant area(s) of the law.

The coursework questions link to the Learning Outcomes shown on the M05 syllabus as
follows:

Question Learning Outcome(s) Chapter(s) in the Study Text Maximum marks per
answer
1 Learning Outcome 2 Chapter 2 10 marks
2 Learning Outcome 3 Chapter 3 10 marks
3 Learning Outcome 4 Chapter 4 10 marks
4 Learning Outcome 5 Chapters 3 & 5 & 6 30 marks
5 Learning Outcome 6 Chapters 3 & 7 20 marks
6 Learning Outcome 7 Chapter 8 20 marks
7 Learning Outcome 8 Chapter 9 20 marks
8 Learning Outcome 9 Chapter 10 20 marks
9 Across more than one Across more than one chapter 30 marks
Learning Outcome
10 Across more than one Across more than one chapter 30 marks
Learning Outcome

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M05 Coursework assignment answer template

To be completed before submission:

Word count: 9,654

Start typing your answer here:

Question 1 – Learning Outcome 2 (10 marks)

A) The torts in question here are that of trespass to land and goods and the tort of
conversion.

Jacob has noticed an opportunity to make some money at the detriment of his
neighbour and subsequently, he has intentionally and unlawfully entered his
neighbours private property which, under tort, is deemed as a trespass to land. Jacob
has then stolen the exotic plants belonging to his neighbour, thus leading to trespass
of goods.

According to Parsons et al, M05 Ch 2 (2022/23), conversion can be explained as “an

unlawful act in which a person without authority interferes with the goods owned by
another person”. As Jacob has stolen goods belonging to his neighbour and then
sold these plants and not merely moved them from one place to another, this is
classed as conversion under the Torts Act 1977.

B) The principle remedy in the law of torts is an award of damages, usually in the form
of monetary compensation and therefore this is the likely remedy that the neighbour
may seek for his loss. Given Jacob’s motives, the neighbour may also be able to
seek further monetary compensation under an aggravated damages claim.

The second remedy that may be available to Jacob’s neighbour is that of an

injunction against Jacob, which refrains him from entering his neighbours land. This
may be awarded in addition to monetary compensation or instead of it all together,
however this decision is on the discretion of the court.

In conclusion, Jacob will likely be liable to pay monetary compensation to his

neighbour for the stolen property and in addition may receive an injunction from the
court ordering him to stay away from his neighbours property.

Question 2 – Learning Outcome 3 (10 marks)

A) The focus of this scenario is what makes a contract legally binding in law and what
remedies are available should a legal contract be broken.

In this scenario, we note that for the formation of a legal contract to be valid, it will
need to fulfil the five essentials of a contract. In this case, it is clear that this has been
completed as there has been an offer made to lease the property in question, which
has then been considered and the parties have exchanged promises to this effect
and therefore an unqualified acceptance of the terms has been completed by the
signing of the agreement.

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The intent of both parties is clear and it would be safe to assume that both Nicola and
the landlord wish to create a legal relationship and that both have the relevant
capacity to do so.

However, given that the lease was for five years, the requirement is that it must be
made by deed, which is then signed and witnessed. Furthermore, the document will
also need to be clear on the face of it that it is intended to be a deed. Should the
document have not been witnessed, or should it not be clear that it is made by deed
then Nicola could potentially argue that the contract is void for the purpose of
creating a legal estate.

If the agreement was made by deed and subsequently meets the relevant criteria,
then the agreement will be valid and Nicola will not be able to be released from it.
Should Nicola then break the contract, the landlord would be entitled to remedy
under breach of contract, which in this scenario would highly likely be damages in the
form of monetary compensation.

In conclusion, given the circumstances, Nicola is likely to be held to the contract, this
is unless it was done by deed and that was not clear on the face of it, nor was it
witnessed. If the deed does not fulfil these requirements then Nicola could argue for
the contract to be void.

B) In this scenario, we need to assess the terms of a contract if it is entered in to by a

Minor.

Given that Adam is 16 years of age, he is classed as a minor by law until he is 18, as
stated in the Family Law Reform Act of 1969 (Parsons et al, M05 (2022/23), Ch 3,
B7A).

According to Parsons et al, M05 (2022/23) Ch 3, B7A, minors are subject to special
legal rules, which “restrict their contractual capacity and protect them from their own
inexperience’s or situations which may lead them in to agreements, which will leave
them disadvantaged”. We do need to be aware however, that minors may be bound
to contracts if they are deemed to be for necessities relevant to the minors
circumstances.

In this case, Adam has agreed to purchase driving lessons and subsequently paid for
them. If Adam were over 18 years of age, it is highly likely that the contract would be
binding as offer, consideration and acceptance have all taken place. However, given
that Adam is classed as a minor in law and the goods in questions are not
necessities, it is likely that Adam can repudiate the contract and reclaim the money
that has been paid. This is not the case for the driving instructor and should Adam
wish to continue with the driving lessons, the instructor would be bound to the
contract. It should also be noted, that if on his Majority, Adam ratified the contract,
then he would be bound by its terms.

Therefore, in this situation, the driving school would not be able to claim a breach of
contract against Adam and would not be entitled to remedy in law.

Question 3 – Learning Outcome 4 (10 marks)

A) This case relates to the law of agency and the agreement between the principal and
the agent. XY Ltd have engaged TD Ltd as their agent to sell tickets on their behalf.

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TD Ltd have been selling the tickets at a higher price than agreed by the principal,
XY Ltd.

This form of agreement would normally be set out at inception and in writing to create
a legal contract between the two parties involved. Generally speaking, contractual
terms which are written are expressly applied and the agent should be obedient to
the terms of the agreement as instructed by the principal. However, if the terms are
not expressly applied, then the agent will have duties implied at common law. As the
situation states that the tickets are being sold for a higher price than agreed, then
depending on the terms of the contract, this could effectively contradict the terms and
lead to a breach.

Under the law of agency, the agent also has a duty of good faith toward the principal,
in which they are required to make a full disclosure of details and one could argue
that TD Ltd have not disclosed the ticket sale price to XY Ltd. Given that the agent
has also made secret profit from the sale of the tickets, this would lead to a breach of
the duty of good faith toward the principal.

Depending on the agreement, TD Ltd could potentially argue that they are entitled to
remuneration as they are acting as the agent of XY Ltd. If this remuneration amount
is not stated in their contract with XY Ltd, then TD Ltd could theoretically claim the
profit is their right to be rewarded for the work they have undertaken.

If the case were to go to court, then depending on the terms of the contract of
agency, XY Ltd could potentially sue for breach of the contract of agency and would
likely be awarded damages in the form of monetary compensation as a remedy. XY
Ltd may also terminate the agency agreement with TD Ltd.

B) Here, TD Ltd have discounted some of the ticket prices, which is outside of their
authority of the agreement with the principal, XY Ltd.

As we have already established, the agent has a responsibility to the principal to

obey the terms of their agreement and also to account for any monies received on
behalf of the principal. Clearly, TD Ltd has acted outside of their authority, whether
this has been expressly applied at inception of the agreement as the question
suggests, or implied at common law.

Although TD Ltd have claimed that this is a reasonably common practice within the
industry, they should have sought permission from the principal to carry out this
action under the duty of good faith toward the principal.

The action taken by TD Ltd has therefore had a direct impact on the profit of the
principal and as such, should the principal sue TD Ltd for breach of contract, it is
likely that they would be awarded damages in the form of monetary compensation.

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Question 4 – Learning Outcome 5 (30 marks)

A) (i) This is a question of insurable interest and how insurable interest can arise.

For insurable interest to be present, the insured entity must generally be at a loss
should the subject matter under the policy be damaged or lost. There is a need for
the relationship between the insured and subject matter to be recognised at law.

In this case, this would normally be a contract in law and it would be formed between
the hotel and the guest for the duration of their stay. For this contract to be valid then
offer, consideration and acceptance must have all been present. Provided this has
taken place and depending on the terms of the contract and the circumstances
surrounding the loss, the hotel may be liable for any loss or damage suffered to
guests contents whilst in their control as they may be acting as a bailee.

Under the statute of The Hotel Proprietors Act 1956, a hotel has a duty to make
good the loss on guest’s property, unless the loss was a result of the guests own
negligence.

Therefore, Yasmin may purchase insurance on her guest’s contents to cover her in
the event of a loss, however cover will normally be restricted to certain provisions, for
example no cover by theft of an employee, or theft of contents left in the open.

(ii) Normally, for a person to insure the life of another, there must be an insurable
interest in doing so. For example, this may be a husband and wife, who jointly own
their home and if one were to pass away, the other would suffer financially due to
loss of income, as noted in Parsons et al, M05 (2022/23) Ch 5 D1A, and the Married
Women’s Property Act 1882.

Ordinarily, under a standard life insurance policy, Yasmin would not be able to insure
the life of Martin as there is not sufficient insurable interest. However, as Martin is
under a contract of employment with the hotel and also the manager he may be
deemed to be a “key person” and therefore Yasmin may insure him under a “key man
policy”. Insurable interest will arise under the contract of employment and this will be
recognised at law.

This type of insurance is designed to cover key persons within a company in the
event of death or critical illness and that which leads the company to suffer from loss
of profits, costs of possible recruitment of a replacement and training for that
individual.

It should be noted that the hotel will pay the premium for this insurance and would be
the beneficiary of any pay outs in the event of a claim, not the “key person” named.

(iii) This again is a question of insurable interest and in this scenario, Yasmin wishes
to insure the life of Asif, her brother-in-law.

Although Asif is the brother-in-law of Yasmin, the relationship is not that of someone
who would necessarily stand to lose financially should Asif pass away or be critically
injured.

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The only circumstance which would arise allowing Yasmin to insure the life of Asif,
would be if she was a creditor to Asif and she could therefore insure for the potential
loss of repayment of a loan should Asif pass away or be critically injured.

Furthermore, given that Asif is only someone who occasionally helps out around the
hotel, it is highly unlikely that he is a “key person” and could be insured under a “key
man” policy.

Should Yasmin attempt to insure the life of Asif, then if there is a failure to satisfy the
rules of insurable interest, the contract would be void.

(iv) For Yasmin to be able to insure the house of her father, Mahmood, she must
again be able to satisfy the requirements for insurable interest.

Under a home insurance policy, it may be noted that several different parties have an
interest in the property depending on their relationship with it. For example,
Mahmood, being the owner of the property would stand to lose financially should a
loss occur. Alternatively, Mahmood may have a mortgage on the property leading to
the mortgage company having a financial interest in the property in respect of the
loan provided to purchase it.

Although Yasmin may be absolutely certain that she will inherit the property, she
does not have a current interest in it, but merely has an expectancy to receive it upon
the death of her father, she therefore does not hold sufficient insurable interest and
would not be able to insure the property in her own name. An example of this is in the
leading case of Lucena v. Craufurd (1806) (Parsons et al, M05 (2022/23) Ch 5 B2C
Example 5.5).

If she were to incept a policy in her name for her father’s property then this policy
would be void due to the lack of insurable interest.

B) (i) This scenario considers the effects of insurable interest on insurance contracts
and what should happen if insurable interest is not present. There is also an issue
arising from the deliberate misrepresentation of a material fact by Yasmin.

As determined in the doctrine of insurable interest within section 5 (2) of The Marine
Insurance Act 1906, “for a contract of insurance to be valid in law, there is a
requirement for the insured to satisfy the necessary requirements of insurable
interest in the subject matter of the insurance policy”.

A simple definition of insurable interest would be that the insured person on the
policy would suffer a loss if the event which they have insured against were to
happen.

If an event were to take place which leads to a loss relating to the subject matter of
the insurance contract, which in this case is the house insured, Yasmin would not be
at a loss and therefore, she is unable to satisfy the doctrine of insurable interest.

Under the Consumer Insurance (Disclosure and Representations) Act 2012, a

consumer has an imposed duty to take reasonable care not to misrepresent material
facts. Here, Yasmin has deliberately made a misrepresentation to the insurer
regarding the material facts of the policy by claiming that she is the owner of the

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property which belongs to her father. This could be deemed to be a fraudulent
misrepresentation, however the onus to prove this would be on the insurer.

Should the insurer be able to prove that the misrepresentation was qualifying under
the Consumer Insurance (Disclosure and Representations) Act 2012, they will be
entitled to remedy. This may be in the form of damages or in the form of retention of
any premium paid, unless this would be deemed unfair on Yasmin to do so.

Given both points, it is likely that the insurer would avoid the contract ab initio and
return any premium paid by Yasmin. It is unlikely that the insurer would have paid
any claims under the policy as under the principal of Indemnity, Yasmin would have
needed to prove that she suffered a loss in order for the insurer to act. However
should they have done so, they will be entitled to recovery of the claim payment from
Yasmin.

(ii) The principle that needs to apply here is that of breach of the duty of a fair
presentation of the risk as there has been a misrepresentation of what is considered
a material fact.

Firstly, we must note that in order for Yasmin to insure the life of Martin, she would
need to satisfy the doctrine of insurable interest. Here, there is a relationship through
the contract of employment between the hotel and Martin. Given that Martin is the
manager of the hotel, it is likely that he could be insured under a “key man” insurance
policy. This would provide cover for loss in the form of financial loss, recruitment of a
suitable replacement or additional training costs should Martin either be critically ill or
if he should pass away.

As the insured, in this case would be the hotel, the insurance policy would be classed
as a non-consumer insurance contract and would therefore be subject to the
Insurance Act 2015. Under the Insurance Act 2015, the policyholder has a duty of
fair presentation of the risk they are looking to insure. Simply, the entity applying for
the insurance contract has a duty to tell the truth.

The next point to investigate is whether or not the misrepresentation of Martin’s age
is either fraudulent, negligent or innocent. As the question suggests that Yasmin has
inadvertently given the incorrect age for Martin, it would be safe to assume that she
has not deliberately or recklessly given this information with the intention of
misleading the insurer and therefore this would not be classed as fraudulent.

It is likely that the insurer will take the stance that the information provided by Yasmin
was done so as a matter of sheer carelessness. In this instance, the insurer would
likely deem this to be a negligent misrepresentation of material information relating to
the risk.

Under the Insurance Act 2015, the insurer is entitled to remedy under the duty of fair
presentation of the risk, provided they can prove that it is qualifying. For this to be a
qualifying breach of the duty of fair presentation of the risk, the insurer would need to
prove that they would have not entered in to the contract of insurance at all based on
Martin’s age, or they would have done so albeit on different terms.

Should the breach be proven to be qualifying then the remedy available to the insurer
is that of avoidance of the contract provided the insurer can prove that they would not
have entered in to it on any terms. If the insurer would have entered in to the

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contract, albeit on different terms then the contract is to be treated as though it been
entered in to on those terms if the insurer requires.

It should also be noted that should the insurer have also charged a higher premium
than what was applied at inception based on the incorrect information, they are
entitled to proportionately reduce the amount paid on a claim.

Question 5 – Learning Outcome 6 (20 marks)

A) The first question here is whether the term in question is a condition, warranty or
exclusion under the policy.

Although it is unclear, this is likely to be a condition under the policy and cover shall
not be provided by the insurer if an accident were to arise which had been caused
directly as a result of the use of alcohol or drugs.

There are different forms of conditions under a policy, namely conditions that are
precedent to the contract, conditions that are precedent to liability and mere
conditions. The wording of the condition would be one that suggests it is a condition
precedent to liability.

Motor insurance is compulsory in the UK and this is covered under the Road Traffic
Act of 1988. Under section 148 (2) (a) of the Road Traffic Act 1988, insurers are
not entitled to rely on breaches of conditions or warranties by the policyholder in
order to reject claims made by a relevant third party. Although this is likely to be a
breach of a condition under the policy, the insurers still have a legal responsibility to
indemnify third parties in the event of a claim which has been caused by the
negligence of their policyholder (Parsons et al, M05 (2022/23) Ch 7 B7A).

However, as Robin has effectively breached this condition under the contract, the
insurer would argue that they are entitled to remedy following indemnifying the third
parties. Should this be granted, then it would normally be in the form of damages in
this situation.

B) The focus of this question is that of Robin’s rights under the contract given that he
has effectively breached a condition.

Whether or not the insurers repudiation of Robin’s claim is valid will depend upon the
view of the courts and how they perceive the wording of the condition used within the
policy.

The insurers have stipulated that they will not provide cover if Robin is under the
influence of alcohol or drugs at the time of the accident. Here, Robin has used
prescription drugs and subsequently had an adverse reaction. The insurers are
relying on this to refuse cover for Robin’s own damages.

Under the Insurance Act 2015, the insurers are no longer able to avoid the contract
as a whole for a breach of condition or warranty, provided that the breach is able to
be remedied. Therefore it is likely that this will be seen as a suspensive condition, in
that should an incident arise during the time at which Robin is under the influence of
alcohol or drugs, then cover would be suspended. When this has been remedied and
Robin is no longer under the influence of alcohol or drugs, then cover would be
restored and any claims would be payable.

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As this is the case, then the insurer would likely attempt to exclude cover for Robin’s
own damages and should the case go to court, it would be on the courts discretion
should the wording of the condition be ambiguous.

C) What we need to investigate here is if there is any ambiguity in the condition which
may lead to it being read differently to how the insurer has intended.

In this case, there is a dispute between Robin and the insurer, with the former
claiming that the wording is ambiguous and the latter refusing to settle a claim due to
breach of a condition that is relevant to the loss.

Ambiguity can be considered if there is more than one meaning of the words used in
the condition. The condition states that “AB Ltd will not provide cover in the event of a
motor vehicle accident where the driver of that vehicle is under the influence of
alcohol or drugs, at the time of the incident”.

There are several rules which could be applied to distinguish the meaning of the
words and resolve any disputes. According to Parsons et al, M05 (2022/23) Ch 7
A5B, under the Consumer Rights Act 2015, there is a requirement for “consumer
contracts to be in a plain, intelligible language”. Therefore, we need to establish if
there are any technical insurance or legal meanings behind the words in question
and in this case there is not.

Furthermore, if we were to take the words as they are ordinarily meant, then the
insurer could argue that Robin was under the influence or drugs, albeit prescription
drugs and has therefore breached a condition of the policy and allowing them to
avoid liability in this instance.

Robin is likely to argue that using the noscitur a sociis rule, in which a word may be
known by the company that it keeps, that the wording within the condition is
ambiguous. The fact that “drugs” directly follows “alcohol” within the condition would
suggest that this relates to a form of illegal drugs as opposed to prescription drugs.
This is similar to the case of Young v. Sun Alliance and London Insurance (1977),
in which the court held that where water ingress in a downstairs lavatory was not
deemed to be a “flood” under the terms used in the policy wording. This is because
“flood” was grouped with storm and tempest within the wording, indicating that there
needed to be an element of violence, suddenness or largeness about the incident
(Parsons et al, M05 (2022/23) Ch 7 A5C).

As a last resort, although not very common, the court may apply the contra
proferentem rule, which would effectively give Robin the benefit of the doubt.
However, for this rule to apply there must be a “genuine ambiguity of the wording
used and a reasonable alternative of the meaning within it” (Parsons et al, M05
(2022/23) Ch 7 A5D).

Depending on the rule applied by the court will depend on the outcome of the
dispute. Should the court use the ordinary meaning of the words then the insured
could be found in favour and would avoid liability for Robin’s claim of damage to his
own vehicle. However, should the court apply the noscitur a sociis rule, then the
insurer would be liable under the policy as the condition would be deemed as
ambiguous.

Question 6 – Learning Outcome 7 (20 marks)

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A)
The principle that is brought in to question in this scenario is that of the doctrine of
proximate cause.

Proximate cause can be defined as the most direct or immediate event, which then
leads to a loss. Although, sometimes this can be difficult to determine given that
there may be a variety of factors at play. The most well-known case on this subject
and one that demonstrates proximate cause is that of Leyland Shipping v. Norwich
Union Fire Insurance Society Ltd (1918) (Parson et al, M05 (2022/23) Ch 8
Example 8.13). Here, a ship insured under the policy was damaged by a torpedo.
Later, during a storm, the ship was trying to move to another port and subsequently
sank. It was deemed that the torpedo was the proximate cause of the loss because
the damage of which was present throughout and subsequently the ship was not
covered as this was a war risk and excluded from the policy.

In this scenario, in order to establish whether the policyholder can claim for the total
loss of the outbuilding or not, we must first establish what caused the fire to break out
within the premises as the burden of proof lays with the policyholder to prove that the
peril is one that is insured under the policy.

Once we have determined what has caused the fire to break out and therefore what
the proximate cause of the loss is, we must then examine the insurers policy wording
to understand if the cause of loss is an insured peril, an excluded peril or an
uninsured peril.

Provided that the proximate cause of the loss is a peril which is insured under the
policy wording, then the policyholder will be able to claim for the total loss of the
outbuilding less any deductible. Alternatively, should the policy wording exclude the
peril then cover will not be provided for the loss.

B) This is a question of causation and if there is a direct link between the proximate
cause of the loss and the subsequent water damage.

Firstly, we need to establish the proximate cause of the fire, which had broken out
within the premises. Provided that this is an insured peril under the policy, then next
we need to establish whether there is a direct link between the water damage caused
by the fire service and the fire itself.

It is evident that in this situation the damage caused by the fire services use of water
is interdependent of the damage caused by the fire itself. Thus meaning that in effect,
the water would have not caused damage to the premises on its own accord, but
were it not for the fire that had broken out and the subsequent need for the
intervention of the fire service.

The case of interdependent causes can be exampled in the case of Wayne Tank
and Pump Co. Ltd v. Employers’ Liability Insurance Corporation Ltd (1974)
(Parsons et al, M05 (2022/23) Ch 8 Example 8.15). In this case, the insured
company had built a storage tank at a plasticine factory which, unfortunately then
caught fire. The causes of the fire were judged to have been the defective state of
the equipment installed and the negligent act of an employee who switched the
equipment on and left it on all night. The causes of these losses were both
independent of each other and also interdependent of one another. Meaning that
neither cause led to the other and neither cause led to the loss itself.

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Generally, as part of an insurance policy, the policyholder is typically required to take
reasonable precautions to avoid loss or damage and to take reasonable steps to
mitigate any loss. Here, the use of water by the fire service was necessary to avoid
any further loss being caused by the fire.

Furthermore, the burden of proving that the loss was directly linked to the proximate
cause would have been satisfied and therefore, the intervention of the fire service
and the subsequent damage caused by the water to alleviate the fire would be
covered under the policy and the policyholder should be able to claim.

C) The point we need to focus on in this question is the doctrine of proximate cause and
if there is a direct link between the two losses.

The doctrine of proximate cause was codified under the Marine Insurance Act 1906,
in which it states that, “for an insurer to be liable for a loss, the loss must be
proximately caused by an insured peril, however they are not liable for any loss
which is not proximately caused by a peril insured against” (Parsons et al, M05
(2022/23) Ch 8 C).

As already stated, the burden of proving that a loss is an insured peril under the
policy falls down to the policyholder. Depending on whether the peril will be insured,
uninsured or excluded will be dependent on the insurers policy wording and the
scope of their cover. If the policy is written on an all risk basis then the insurer would
normally use exclusions to limit their cover. Alternatively, the policy may be a named
perils policy, in which the insurer names the perils to be covered and unless
specifically excluded, other perils will be uninsured.

The two losses in this case, being the theft of property in an adjacent building and the
fire in another building are independent of one another, in which, both perils
combined have caused a loss and both would have caused some loss in its own
right.

Provided that the policyholder can satisfy the burden of proof and establish that the
theft was proximately caused by the fire in the adjacent building then they will be able
to claim under the policy. Alternatively, should the policyholder fail to satisfy the
burden of proof then they will not be able to claim for theft of the goods as part of the
fire claim.

Should the latter be the case, then unless the theft is specifically covered under
another policy in its own right then the policyholder will not be able to claim for the
theft.

Question 7 – Learning Outcome 8 (20 marks)

A) In this question, we need to look at the principle of indemnity itself and the most
relevant basis of settlement following the flood claim on the building. Indemnity in
insurance effectively means putting the insured back in the same position that they
were in immediately before a loss occurred.

The first point to investigate is whether the property is insured on an indemnity only
policy or on a reinstatement policy. We also need to consider the fact that the
property is Grade II listed and the implications of this accordingly.

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If the property is insured on an indemnity only policy, then we need to establish what
Desislava’s intentions are for the buildings and whether it is likely to be used for its
previous purpose as a paper mill. Given that the building is currently being used for
storage, it would be safe to assume that it is no longer used as a paper mill.

As the property is Grade II listed, it is likely that the cost of repair will be substantially
higher than the market value of the building, especially given that its previous
purpose as a paper mill is now obsolete. Normally, under an indemnity only policy,
the property would be repaired, to the value of the loss at the time of the claim, less
an amount for betterment and provided that the sum insured is adequate.

The sum insured for the property has not been updated since 2018 and therefore
there is a possibility that the building is underinsured. If this is the case and the sum
insured is not adequate, then depending on the terms of the policy, the claim
settlement may be subject to the average clause, although this clause will need to be
expressly applied in the policy conditions.

As previously mentioned, depending on the intentions of Desislava for the building,

this may impact the insurers decision for the basis of settlement. This can be
exampled in the case of Reynolds and Anderson v. Phoenix Assurance Co Ltd
(1978) in which the building was previously used for maltings. In this case, the court
ruled that the insurer should reinstate the building in its original form as the
policyholder had a genuine and reasonable intention for rebuilding it (Parson et al,
M05 (2022/23) Ch 9 Example 9.3).

Should Desislava in this case not have a reasonable and genuine intention to
reinstate the building to its former state, then the likely basis of settlement provided
by the insurer would be that of payment of the market value of the building at the time
of the loss. Given that the building holds Grade II listed status, replacement would
likely be unavailable. If, the policyholder can prove that they have a genuine and
reasonable intention for rebuilding, then provided that the policy covers
reinstatement, this would be the likely outcome for Desislava.

B) This question again, looks at the principle of Indemnity and the correct basis of
settlement given the circumstances of the claim and the intentions of Desislava for
the computers.

The basis of indemnity for the loss to the computers would firstly be dependent on
whether the cover provided under the policy is that of an indemnity only basis or a
new for old basis.

If the policy were to cover indemnity only then Desislava would typically be entitled to
claim for the market value of the computers at the time of the loss, with a reduction
being made for wear and tear. Alternatively, if the policy was to cover for
reinstatement of the computers on a new for old basis, Desislava could insist on
replacement of the computers as new with no reduction for wear and tear.

One other thing that we need to consider in this scenario is that the computers in
question, which have been damaged beyond repair, could not have been sold on the
open market and they were due to be given away to a charity for use in projects. This
could potentially have an impact on the basis of settlement as the insurer could argue
that Desislava is only entitled to indemnity based on the market value of the goods at
the time of the loss and not on new for old cover, given their intentions were to
dispose of the computers and not replace them.
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Taking the aforementioned into consideration, it is likely that in this case, the insurer
would provide indemnity to Desislava by means of cash settlement to the market
value of the computers at the time of the loss, although as the question states that
they could not be sold on the open market, the insurer may have to provide cover on
a replacement basis, less deduction for betterment.

C) The main points that need to be considered in the case of the paintings are that of
any underinsurance and if the paintings have been specifically insured on the policy.

Depending on the value of the paintings, it may have been necessary at inception to
have them listed on the policy as specified items. If this were the case, the insurers
are potentially liable to pay the value specified at inception, less any excess
applicable, provided that Desislava can prove the value of her loss. However, if the
paintings were not specified on the policy then the claim may be subject to the
policies standard limits for valuables and Desislava could receive less than a full
indemnity should their value be over these limits.

We must also note that there has been a surge of popularity in the artist, leading to
the paintings becoming highly sought after. Therefore, even if the paintings have
been listed on the policy, their values may be inadequate and this could then mean
that they are underinsured. If this is the case, then provided that it is expressly
applied in the contract, the average clause may apply.

If the average cause were to apply, then the formula used would be as follows; the
sum insured at the time of the loss multiplied by the amount of the loss, divided by
the value at risk at time of loss equals the liability of insurer.

Unfortunately, due to the specialist nature of the paintings and the extensive damage
caused by the flood, it is highly unlikely that they will be able to be repaired or
replaced easily. Should there be a readily available market for replacement then this
is an avenue in which the insurer could possibly take, although, as the paintings have
likely increased in value, replacement may put Desislava in a better position than she
was in and contradict the principle of indemnity.

It is more likely that the insurer would offer a cash settlement, either on the value
specified, less the policy excess, or the limit within the policy wording, depending if
the paintings have been specifically listed at inception.

Question 8 – Learning Outcome 9 (20 marks)

A) In this scenario, we need to understand the principle of contribution and how it can
arise in insurance contracts. This is also a question of the different types of
contribution clauses and their impact on the policy.

Contribution will only arise when certain conditions have been satisfied and in the
case of indemnity insurances, effectively prevents the policyholder from receiving
more than indemnity should they have more than one policy covering the same loss.

Here, WTX Ltd have an insurance policy with CD Ltd on their water taxi, which they
have decided not to renew and they have subsequently taken out a policy elsewhere
with EF Ltd. It is noted that the policy with CD Ltd has a non-contribution clause and
the policy with EF Ltd has a rateable proportion clause.

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A non-contribution clause will effectively state that the insurance policy in force with
CD Ltd, will not contribute to any loss that is also covered by another policy. If there
is an overlap in cover between the two policies, the non-contribution clause with CD
Ltd will essentially state that the full burden of loss should be borne by EF Ltd.

Likewise, the policy with EF Ltd is subject to a rateable proportion clause, which
basically means that their policy will only bear its own rateable proportion of the loss
should another insurance policy covering the same loss exist. This rateable
proportion amount can be calculated by either using the maximum liability method or
the independent liability method. Whether the maximum liability method or
independent liability method should be used is dependent on the usual market
practice for this type of insurance.

As both policies have clauses stating that they will not be liable for the full amount of
the loss, or an amount above their rateable proportion, then it could be viewed that
WTX Ltd would not receive full indemnity following the claim. Although both clauses
are valid in law, the court would normally reject the possibility of WTX having no
cover or only partial cover under their policies. This can be exampled in the case of
Gale v. Motor Union Insurance Co. (1928) in which Loyst, while driving Gale’s car,
had an accident. Loyst was covered under both the driving other cars extension of
his own policy and Gale’s any driver policy, however both had non contribution
clauses effectively stating that neither policy would respond should there be another
policy in force covering the same loss. Here, it was decided that both non-
contribution clauses effectively cancelled each other out and the loss was borne
equally between either insurer (Parsons et al, M05 (2022) Ch10 G1B Example
10.24).

It is likely that provided both policies have an overlap of cover and meet the relevant
contribution conditions, then the non-contribution clause stated by CD Ltd will
override that of the rateable proportion clause of EF Ltd and deem it irrelevant.
Therefore full liability will fall to EF Ltd for the claim.

One further thing to consider is if there is actually an overlap in cover. If one policy
does not begin until a certain time and the other policy is still in force, then essentially
contribution will not arise and whichever policy is on cover at the time will be liable for
the full amount of the loss.

In conclusion, irrespective of the circumstances, WTX Ltd will be entitled to a full

indemnity. Whether this is provided by CD Ltd, EF Ltd, or both, is dependent on
whether the policies can satisfy the contribution conditions.

B) The principle of contribution is a “corollary to the principle of indemnity, in that the

insured should not receive more than an indemnity” in the event of a claim, owing to
having more than one insurance policy covering the same risk (Parsons et al, M05
(2022/23) Ch 10 E). Contribution clauses are valid in law and they can be relied upon
by insurers to reduce their part of the loss.

The most usual cause of double insurance is due to an innocent overlap between two
or more policies, however there are cases where this can be a fraudulent act of the
policyholder to attempt to obtain more than indemnity on a claim settlement. For that
reason, contribution clauses within policies are common and they are normally used
to prevent the unjust enrichment of the policyholder.

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In this scenario, WTX have a policy with an insurer that has a non-contribution
clause. The non-contribution clause will normally state that no cover is provided
under the policy should there be another policy in force covering the same subject
matter. Consequently, the insurer with this clause will not contribute towards any
payment of loss and the other policies in question will be called upon to cover the full
amount of settlement. Should the other policies in question also contain non-
contribution clauses, then effectively they will cancel each other out and the insurers
will be equally liable.

If the policy covering WTX Ltd had a rateable proportion clause, then the insurer
would only be liable for an amount that is proportionate to the cover they are
providing under the policy and likewise, any subsequent insurer would be liable for
their rateable proportion, should their policy have the same clause.

To conclude, irrespective of whether the policy covering WTX Ltd has a non-
contribution clause or rateable proportion clause, they will be entitled to a full
indemnity, with the exception of any deductible in the form of an excess or franchise.
If the policies in question have conflicting contribution clauses, then the insurers will
either share the amount of the loss equally, or on a proportionate scale, depending
on the clauses in question.

Question 9 – Across more than one Learning Outcome (30 marks)

A) The relevant areas that we need to assess here are that of the Law of Torts and
whether the hotel has a duty of care to persons present on their property.

For liability to be determined again NMO Ltd, there are three essential points that
need to be established . These are, whether the hotel has a duty of care towards the
firefighter whilst on the premises, whether there has been a breach of that duty
towards the firefighter and there must have been some form of damage suffered by
the firefighter.

Given that the firefighter has entered the property to mitigate the loss being caused
by the fire and that being incurred by NMO Ltd, it is safe to assume that they are
there lawfully and that their presence is permitted. Irrespective of the intention of the
firefighter, NMO Ltd have a duty of care to persons using the property and this is
covered under the Occupiers Liability Act 1957. The act states that a property
owner must take reasonable precautions to ensure that a visitor will be reasonably
safe in using the premises for the purpose for which they are either invited or
permitted to do so by the occupier (Parsons et al, M05 (2022) Ch2 I1).

Secondly, it must then be established if NMO Ltd have breached the duty of care
owed to the firefighter. NMO Ltd would have breached this duty if it can be proven
that they had not taken reasonable precautions to ensure the safety of the firefighter
for the duration of their visit, if it were reasonably foreseeable that they could be
injured.

Lastly, it is noted that there must have been some form of damage suffered by the
firefighter, which in this case is apparent given the serious injuries incurred.

It is likely that liability would be established under the tort of negligence and the
firefighter would look to claim under NMO Ltd.’s public liability policy for the injuries
suffered in the course of their visit. The firefighter must be aware
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that they have a three year period in which to claim for personal injury and if
successful, will normally be awarded damages in the form of monetary
compensation.

Depending on the value of the claim, if the case were to go to court, it would need to
be started in the County Court, unless the claim is over £50,000, in which case it
would be started in the High Court. Furthermore, the fast track method would
normally be used provided the value is no more than £25,000. Should the value of
the claim rise above this amount, then it will normally be allocated using the multi-
track method. Alternatively, to avoid court action and if NMO Ltd accept liability, then
they could make a Part 36 offer to the firefighter.

B) A key point mentioned in this scenario is that of the firefighter having entered a part
of the building for which they had no reason to do so.

Although as already discussed, the firefighter was permitted to be on the property,

which therefore led to NMO Ltd having a duty of care toward them, NMO Ltd would
likely argue that the firefighter had no need to enter the particular part of the building
which they were in and which then subsequently led to their injuries being sustained.

One defence available to NMO Ltd would be under volenti non fit injuria, which
essentially means that no wrong has been committed to a person who has given
consent. Although the firefighter has not directly consented to being injured, NMO Ltd
could suggest that as the firefighter was aware of a potential risk of injury happening
during the course of their employment, they have therefore indirectly consented to it
and as such, fully relieve NMO Ltd of any responsibility for the negligent act.

Should the volenti non fit injuria defence fail, then another option available to NMO
Ltd would be that of contributory negligence on the firefighters behalf. Although this is
only a partial defence and would not relieve NMO Ltd of full liability, it would likely be
more successful as NMO Ltd could argue that the firefighter contributed to his injuries
by entering a part of the property that they were not required to do so.

If NMO Ltd were successful under the defence of contributory negligence, then their
liability would be reduced in accordance with the amount of responsibility attributable
to the acts of the firefighter.

To conclude, it is unlikely that NMO Ltd would be able to defend their full liability and
may at best hope to achieve a partial liability under contributory negligence.

C) This is a question that relates to the contracts between NMO Ltd and their customers
and if there is a breach of this contract.

Upon making their bookings at the hotel, both parties would have entered in to a
legally binding contract with one another. In order for the contract to be valid at law,
there must have been an offer, consideration and acceptance of the terms.

Due to the inadequate fire safety provisions at the hotel, the fire safety officer had
closed the hotel for the foreseeable future and this, in turn means that NMO Ltd will
not be able to fulfil their terms of the contract and provide their guests with a room. In
the law of contract, this is also known as an anticipatory breach and although NMO
Ltd had no control of the situation, the guests could argue liability under a breach of

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contract. Normally, liability under contract is strict, meaning that NMO Ltd would still
be liable for any losses accrued by the guests for cancelling their bookings.

Strict liability is best exampled in the well-known case of Rylands v. Fletcher (1868),
in which it was established that although the defendant, a mill owner, was not directly
negligent in his acts which subsequently led to damage on a neighbouring property,
he was nevertheless liable for it (Parsons et al, M05 (2022/23) Ch 2 F Example 2.26).

There is also potentially an element of negligence on the behalf of NMO Ltd, in that
this incident arose due to the inadequate fire provisions of the hotel which had been
overlooked. Should these provisions had been in place, the hotel would not have
been closed and bookings would not need to have been cancelled.

NMO Ltd would likely argue that as the matter was outside of their control, the
contract has become frustrated and therefore both parties are released from their
obligations. Should it be agreed that the contract is under frustration, the likely
decision by the courts would be to put each party back in the position they were
before the contract was made and not provide remedy in the form of damages for the
guests.

In conclusion, if NMO Ltd are found to be liable for breach of contract, the future
guests would be entitled to sue for damages in the form of monetary compensation.
Alternatively, if it is found that the contract has become frustrated, NMO Ltd will be
relieved of their contractual duties and subsequently both parties would be placed in
the same position they were in prior to the contract being formed.

Question 10 – Across more than one Learning Outcome (30 marks)

A) This is a question of misrepresentation and the implications of a breach of the pre-

contractual information duty.

In a consumer contract, and under the pre-contractual information duty, the insured
must take reasonable care not to make a misrepresentation of the information
provided to the insurer. Previously, under the Marine Insurance Act 1906, a
misrepresentation of the information supplied by the consumer would allow the
insurer to avoid the contract only. However, the introduction of the Consumer
Insurance (Disclosure and Representation) Act 2012 (Parson et al, M05
(2022/23) Ch 6) changed this, in that the insurer may only seek remedy if the
misrepresentation is deliberate or reckless.

In this scenario, Mamit has failed to disclose an historic conviction for shoplifting to
the insurer, as he believed it was now spent. On the face of it, it would appear that
Mamit has not done this intentionally to induce the insurer in to the contract and
therefore, we could disregard this as either being deliberate or reckless. Mamit’s
misrepresentation would likely be found to be careless as he should have checked
the time period for when his conviction would have become spent under the
Rehabilitation of Offenders Act 1974. Care should be taken though, as if ABC Ltd
had not asked specific questions on the proposal form, or if they failed to follow up
any lack of responses from Mamit, then Mamit could argue that he believed he had
acted with reasonable care.

Due to the Consumer Insurance (Disclosure and Representation) Act 2012, ABC
Ltd can only seek remedy from Mamit if the misrepresentation is qualifying and the

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burden of proof for this lies with them. For the misrepresentation to be qualifying,
Mamit must have known that the conviction was relevant to ABC Ltd and did not
care, or he must have known it to be untrue and not care, as noted under Parsons et
al, M05 (2022/23) Ch 6 C1C.

If successful, and ABC Ltd can prove that Mamit has been deliberate or reckless in
his actions, then ABC Ltd may avoid the contract as a whole and retain any premium
paid, with the exception of any unfair amount. Should it be established that Mamit’s
actions were careless, then ABC Ltd may either avoid the contract completely if it
would not have entered in to it on any terms, treat the contract as though it had been
entered in to on different terms or possibly charge a higher premium.

B) The area that we need to focus on here is that of any time limit conditions on
reporting claims under the policy provided by ABC Ltd.

Normally, it is a condition under an insurance policy to give notice of any loss or of

any incident which may give rise to a claim. The reason for this is that claims can be
more difficult to investigate with the passing of time, normally due to fresh evidence
being lost and therefore insurers are keen to assess the claim as quickly as possible
to establish the limit of their liability.

Depending on the conditions set out in the policy wording, ABC Ltd may have
possibly included a late notification of loss condition. This would state that Mamit
must advise them of any incident which could give rise to a loss within a certain time
period. If the condition is one which is precedent to liability, ABC Ltd could refuse any
liability under the policy if it is not adhered too. Alternatively, if the condition is just a
mere condition on the policy, then ABC Ltd may still pay the claim but either reduce
any settlement amount accordingly or look to recover an amount from Mamit.

It should also be noted that for a claim to be paid, the loss should generally be
fortuitous and not that of an intentional act. Given that Mamit has purposely pushed a
trolley in to the security guard, which subsequently caused his injury, it is highly likely
that the insurer would refuse the claim on the grounds of a deliberate act.

To conclude, ABC Ltd may either refuse liability all together due to Mamit’s deliberate
act, or on the grounds of conditions precedent to liability. If they decide to accept
liability, they may compensate the security guard but look to recover an amount from
Mamit for the late notification of the claim.

C) This question surrounds any other parties that may be held liable for the security
guards injuries whilst at work.

Under the Employers Liability (Compulsory Insurance) Act 1969, an employer

has a responsibility to ensure the reasonable safety of their staff during the course of
their employment. In this case, the security guard has intentionally been injured by
Mamit, whilst he was doing his job.

If the security guard can prove that the relevant safety protocols were not put in place
by the employer to ensure that they were safe whilst working, then the security guard
could raise a claim under the employers liability insurance and that of the tort of
negligence in particular.

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Should a claim of negligence be successful, then the security guard would be able to
claim for damages in the form of monetary compensation against the employer.

D) The area that we need to assess here is that of the tort of defamation and in
particular, that of libel.

According to Parsons et al, M05 (2022/23) Ch 2 K1, “a statement is defamatory if it is

false and exposes the claimant to hatred, ridicule or contempt or lowers them in the
eyes of right-thinking members of society generally”.

Under the tort of defamation, a person can either commit slander, which are
statements made verbally or via gestures, or libel, which are statements made via a
permanent form, for example being written down. As stated in this scenario, the
security guard has posted over social media and also made verbal comments
advising that Mamit is violent and a thief. These comments have subsequently led to
Mamit losing his job and he is struggling to find further employment.

In order for Mamit to be able to pursue a claim against the security guard for
defamation, he must be able to prove that he was the person identifiable from the
comments that were posted on social media or made verbally. In order for a claim to
succeed, it must also be evident that Mamit’s has suffered some financial loss, which
in this case would be losing his job and being unable to find further employment.

Should the case go to court, then If the security guard were to defend their
comments, they would likely use the defences of either truth or honest opinion. The
onus of proving either truth or honest opinion is on the security guard and as stated
in Parsons et al, M05 (2022/23) Ch 2 K3, an opinion must be “honest, relevant and
made without malice” for this to succeed.

To conclude, if the security guard is unable to prove that their comments were either
the truth, honest, relevant or made without malice then they could be liable for
damages under the tort of defamation and would likely have to compensate Mamit.
Alternatively, should the security guard be able to satisfy the defamation defence
criteria previously mentioned, then Mamit would be left without redress.

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M05 Coursework assignment answer template

Referencing must be completed before submission

All sources must be referenced in the body of your answer as well as in your reference list. See
the Specimen coursework assignment and answer for examples of how to reference correctly in
text and in your reference list.

References

M05 Insurance Law Text Book

Torts Act 1977
Family Law Reform Act of 1969
The Hotel Proprietors Act 1956
Married Women’s Property Act 1882
Lucena v. Craufurd (1806)
The Marine Insurance Act 1906
Consumer Insurance (Disclosure and Representations) Act 2012
Insurance Act 2015
Road Traffic Act of 1988
Consumer Rights Act 2015
Young v. Sun Alliance and London Insurance (1977)
Leyland Shipping v. Norwich Union Fire Insurance Society Ltd (1918)
Wayne Tank and Pump Co. Ltd v. Employers’ Liability Insurance Corporation Ltd (1974)
Reynolds and Anderson v. Phoenix Assurance Co Ltd (1978)
Gale v. Motor Union Insurance Co. (1928)
Occupiers Liability Act 1957
Rylands v. Fletcher (1868)
*Rehabilitation of Offenders Act 1974 (https://www.legislation.gov.uk/ukpga/1974/53)
*Employers Liability (Compulsory Insurance) Act 1969
(https://www.legislation.gov.uk/ukpga/1969/57/contents)

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M05 Coursework assignment answer template

Glossary of key words

Analyse
Find the relevant facts and examine these in depth. Examine the relationship between
various facts and make conclusions or recommendations.

Construct
To build or make something; construct a table.

Describe
Give an account in words (someone or something) including all relevant characteristics,
qualities or events.

Devise
To plan or create a method, procedure or system.

Discuss
To consider something in detail; examining the different ideas and opinions about
something, for example to weigh up alternative views.

Explain
To make something clear and easy to understand with reasoning and/or justification.

Identify
Recognise and name.

Justify
Support an argument or conclusion. Prove or show grounds for a decision.

Outline
Give a general description briefly showing the essential features.

Recommend with reasons

Provide reasons in favour.

State
Express main points in brief, clear form.

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