Commercial Law, 2011 Bar — Question 44

MULTIPLE CHOICE

On June 1, 2011, X mailed to Y Insurance, Co. his application for life insurance, with payment for 5 years of premium enclosed in it. On July 21, 2011, the insurance company accepted the application and mailed, on the same day, its acceptance plus the cover note. It reached X's residence on August 11, 2011. But, as it happened, on August 4, 2011, X figured in a car accident. He died a day later. May X’s heirs recover on the insurance policy? A) Yes, since under the Cognition Theory, the insurance contract was perfected upon acceptance by the insurer of X’s application. B) No, since there is no privity of contract between the insurer and X’s heirs. C) No, since X had no knowledge of the insurer’s acceptance of his application before he died. D) Yes, since under the Manifestation Theory, the insurance contract was perfected upon acceptance of the insurer of X's application.

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