Final answer:
The law firm should be able to recover the $4 million insurance policy on McGill, because they had an insurable interest in him and such contracts are generally enforceable when taken out with proper consent.
Step-by-step explanation:
In the scenario described, McGill, Swanson and Herer, LLP maintains a $4 million insurance policy on its partner McGill. Since McGill was a significant asset to the firm, generating significant revenue annually, the law firm has an insurable interest in him. The key question is whether the firm can recover the $4 million following McGill's death.The appropriate answer to this would be (a) Yes, the contract is enforceable. In many jurisdictions, it is recognized that businesses can take out life insurance policies on key individuals whose loss would significantly affect the company's financial stability. As long as the insurance policy was taken out with the proper insurable interest and with the consent of the insured, it should be an enforceable contract.
Thus, upon McGill's death, the firm should be able to claim the insurance payout.Concerns about someone harming the person named in the policy (option b) are usually addressed by legal and procedural safeguards, not by invalidating the policy. Additionally, law firms can indeed have an insurable interest in a person (rejecting option c), particularly if that person is integral to the business's success. Finally, while public policy does support the enforceability of life insurance agreements, option d is not as specifically correct as option a, because enforceability also depends on the existence of an insurable interest.