General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An applicant signs a health insurance application after the agent falsely promises that an existing heart condition will be fully covered, knowing it will not. Which element of a valid contract is missing or defective?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A valid contract requires genuine assent — a true meeting of the minds. When an applicant's agreement is induced by fraudulent misrepresentation about the coverage, the assent is not genuine, and the contract is voidable at the innocent party's option. Here the agent's false promise goes to the very subject of the bargain, so the agreement element is defective. The coverage of medical expenses is a legal purpose, the premium is valid consideration, and adult age satisfies capacity.
Why the other options are wrong
- B) The purpose — insuring medical expense risk — is entirely lawful; this is not a legal-purpose defect.
- C) Payment of the premium satisfies the consideration element; the defect lies in how assent was obtained.
- D) Capacity is present; adult applicants have legal capacity, and the issue here is the integrity of the agreement.
Memory hook
Assent bought by a lie isn't assent. Fraud at the door makes the deal voidable.